Probate. And Why You Should Avoid It
What is Probate?
Probate is a legal process that takes place after someone Passes. It includes:
- proving in court that a deceased person’s will is valid (usually a routine matter)
- identifying and inventorying the deceased person’s property
- having the property appraised
- paying debts and taxes, and
- distributing the remaining property as the will (or state law, if there’s no will) directs.
Typically, probate involves paperwork and court appearances by lawyers. The lawyers and court fees are paid from estate property, which would otherwise go to the people who inherit the deceased person’s property.
How does the probate process work?
Probate usually works like this: After your death, the person you named in your will as executor — or, if you die without a will, the person appointed by a judge — files papers in the local probate court. The executor proves the validity of your will and presents the court with lists of your property, your debts, and who is to inherit what you’ve left. Then, relatives and creditors are officially notified of your death.
Probate involves several basic steps:
- Someone is appointed to administer the estate. If there is a Will, the administrator is usually named in the will and is called an executor. If there is no will or no executor named in the will, the probate court appoints someone of its choice.
- The will is proven in court to be valid. State law governs the probate process, so it is important to follow state requirements for signatures, witnesses, and/or notaries to be certain your will is valid.
- The deceased person’s property is identified and inventoried. Most assets cannot be sold or distributed until the probate process is complete.
- Properties are appraised.
- Any debts or taxes owed by the deceased are paid.
- The remaining assets are distributed according to the decedent’s wishes if there is a Will or according to state law if there is not a will.
In most states, immediate family members may ask the court to release short-term support funds while the probate proceedings lumber on. Then, eventually, the court will grant your executor permission to pay your debts and taxes and divide the rest among the people or organizations named in your will. Finally, your property will be transferred to its new owners.
How Long Does the Probate Process Take?
According to the American Bar Association, the probate process, on average, is completed six to nine months after a probate case is opened with the court. This can vary depending on the court and may take years if there are disputes over the legality of the will or distribution of assets. In addition, there may be costs associated with the probate process (such as court fees), the responsibility for which may land on the executor of the decedent’s will if they cannot be paid by the estate. For these reasons, many people get a Living Trust, which can help avoid probate and reduce the time it takes to settle an estate.
Does all property have to go through probate when a person dies?
No. Most states allow a certain amount of property to pass free of probate or through a simplified probate procedure. In California, for example, you can pass up to $100,000 of property without probate, and there’s a simple transfer procedure for any property left to a surviving spouse.
In addition, property that passes outside of your will — say, through joint tenancy or a living trust — is not subject to probate.
Who is responsible for handling probate?
In most circumstances, the executor named in the will takes this job. If there isn’t any will, or the will fails to name an executor, the probate court names someone (called an administrator) to handle the process. Most often, the job goes to the closest capable relative or the person who inherits the bulk of the deceased person’s assets.
If no formal probate proceeding is necessary, the court does not appoint an estate administrator. Instead, a close relative or friend serves as an informal estate representative. Normally, families and friends choose this person, and it is not uncommon for several people to share the responsibilities of paying debts, filing a final income tax return and distributing property to the people who are supposed to get it.
Should I plan to avoid probate?
Probate rarely benefits your beneficiaries, and it always costs them money and time. Probate makes sense only if your estate will have complicated problems, such as many debts that can’t easily be paid from the property you leave.
Whether to spend your time and effort planning to avoid probate depends on a number of factors, most notably your age, your health, and your wealth. If you’re young and in good health, adopting a complex probate-avoidance plan now may mean you’ll have to re-do it as your life situation changes. And if you have very little property, you might not want to spend your time planning to avoid probate because your property may qualify for your state’s simplified probate procedure.