Are you confused about what probate is and how it works? Well! Don’t worry, you’ve landed on the right page.
In simple terms, Probate is a legal process in which a Will is reviewed to check whether it’s valid or not. But, it can also refer to the general administering of a Will or the estate of a deceased person without a will.
If you already have a Will or a Living Trust that states your wishes, Probate becomes a much easier process. In this blog, you’ll know everything you need to know about Probate. And, here is a table of content to give you a quick overview of this article.
Table of Contents
- What is Probate?
- How Does Probate Work?
- Steps Involved In The Probate Process
- Submission Of The Death Certificate
- Will Validation
- Choose an Individual to Conduct Probate
- Post a Bond
- Informing Beneficiaries & Creditors
- Determine Value of Your Assets
- Paying The Fees and Debts of the Deceased
- Distribute Remaining Assets
- When is Probate Required?
- How To Avoid Probate?
What is Probate?
Probate is a legal procedure that authenticates your Will and validates your named Executor. This allows your Executor to distribute your property and belongings. During the process of probate, all your assets will be assessed for the total value. Once that’s done, taxes and debts should be paid then the remaining value of the estate can be distributed.
Probate proceedings are typically based on the existence of a Will. Thus, if you don’t have a Will the probate proceedings become complicated. A probate procedure is not always required but is usually essential when the deceased person’s remaining estate is of high value.
Now, you must be thinking but how does Probate really work? Well! Here is how
How Does Probate Work?
Probate is a legal process that allows an estate to be divided and distributed to the heirs of the deceased. Probate proceedings begin with an inventory of the deceased person’s assets, which are then passed onto his or her beneficiaries. Without a will, probate takes place under what is known as “intestate succession.”
If a person dies without a Will (called dying “intestate”), the probate court will determine how to divide up the estate. A court-appointed administrator—often a close relative or friend of the deceased—will begin the probate process by appearing before the court and listing all of the assets included in the deceased person’s estate. Usually, this entails listing property and assets that were owned solely by the deceased person.
Simply put, the Probate court works by administering an estate after someone dies. It involves analyzing assets, such as homes and bank accounts, and distributing them to the rightful beneficiaries.
Steps Involved In The Probate Process
The process of probate in court depends on whether or not you have a Will. The biggest difference is that when you don’t have a Will, the court appoints someone as a Personal Representative to look over the distribution of your assets. Once a Personal Representative is selected, the rest of the process remains the same.
Submission Of The Death Certificate
The Executor or lawyer, should inform the court of your death and give a copy of the death certificate to begin the probate process.
Will Validation
Your Will must be Validated by the court to make sure it was properly signed and dated in accordance with the law.
Choose an Individual to Conduct Probate
Generally, in case of presence of the Will, a judge formally appoints the person you name as Executor to conduct the Probate. The Executor’s responsibility is to then oversee the process and settlement of your estate. If you don’t have a Will, the court will appoint a Personal Representative who takes over the responsibilities of an Executor.
Post a Bond
Posting a bond can safeguard Beneficiaries against any potential errors an Executor or Personal Representative may make during the probate process. Bonds can be costly, but your estate pays for them. Bonds are not always required, as some states waive them if your Executor or Personal Representative is also a Beneficiary of your estate. You can even include a request to waive a bond in your Will.
Informing Beneficiaries & Creditors
This has to be the biggest task most Executors or Personal Representatives undertake. It includes finding and informing any potential Beneficiaries and possible creditors of your death. He or she also needs to communicate with creditors to settle any debts using money from your estate.
Remember that in cases where there is a Will, Beneficiaries will be named, so informing them becomes easy. However, finding creditors can be a bit difficult and time-consuming, regardless of whether or not a Will is present. But, both parts of this process become very difficult when there is no Will.
Determine Value of Your Assets
For determining the value of an estate, first, an assessment must be done. This accounts for everything you own at the time of your death. Sometimes, especially when it comes to larger estates, a professional appraiser may be required. He or She understands the process of collecting and inventorying all real estate, personal, and household assets to assess their value. The total combined value is then used to determine the estimated value of your estate.
Paying The Fees and Debts of the Deceased
Typically, the funeral expenses are paid from your estate. Once that’s paid, the estate will finance the payments for your medical expenses, filing and paying taxes, and even handling other unpaid debts you may owe during the time of your death. That is why this step requires careful attention as there is potential for debtors to go after Beneficiaries in the future to collect any unpaid debts.
Distribution Of The Remaining Assets
After all the debts have been cleared, the remaining assets are to be forwarded to the designated Beneficiaries. The Executor or Personal Representative should transfer deeds and titles into the correct Beneficiary’s name as per the direction of the Will or the court.
When is Probate Required?
It is necessary to know whether a probate is required or not after the death of an individual. The probate is a long and time-consuming process. The more complex the estate is, the more time it will take to get settled and distributed. And, the longer the duration, the higher the cost.
The Probate process for an estate without a will is costlier than one with a valid will. But, the time and cost required for either of them are still high. Also, the proceedings of a probate court are publicly recorded, so it’s best to avoid probate to ensure that all settlements are done privately.
Different states have different laws regarding probate and whether or not it is required after the death of an individual. Some states have a specified estate value, which needs probate. For instance, probate laws in Texas hold that if the value of the estate is less than $75,000, then probate can be skipped.
How To Avoid Probate?
Probate tends to be a lengthy and exhausting process during the time of grief. But, there are ways you can limit the tension that probate can cause your loved ones. And, there are several benefits of avoiding probate, including time, cost, and privacy.
The Probate cost can vary depending on your state. But generally, Probate means Executor fees, administrative expenses, and legal fees. Thus, the longer the probate process goes on, the costlier it will be. And lastly, one of the biggest reasons people want to avoid probate is for privacy reasons. Probate proceedings are public which can be privacy concerns for a lot of people. But, if you create a Trust it keeps the distribution of assets private.
There are several strategies you can implement to minimize the stress and pressure of probate for your loved ones, for instance:
- Establishing a Living Trust.
When you create and fund a Trust, you’re actually making the Trust the owner of your assets. Thus, after your death, the named trustee manages your assets as per your guidance.
- Give your assets to loved ones when you are still alive.
This way you can reduce your estate’s value and reducing an estate’s value can immensely simplify the probate process. And, it may have some positive tax advantages in terms of federal and estate taxes.
- Try to keep your estate small.
Most of the states have an exemption level that can allow for an expedited probate process for cases where estates are very small in size. You should check the maximum amount your state allows for an expedited probate process. (Don’t be surprised if that amount is higher than you thought, limits can be fairly high in some states).
- Title accounts POD or TOD.
This usually works for bank accounts and some other assets. And, in some states, it is even a valid way to transfer real estate to Beneficiaries.
- Title property jointly.
It helps in transferring the assets from one person to another without having to go through the probate process. You can even hold assets as Community property with the right of survivorship, Joint tenancy with the right of survivorship, and Tenancy by the entirety.
Conclusion
We understand how much headache probate can cause to your loved ones when they are already grieving. Thus, we hope this article helps you guide through the process of probate and help you understand everything you need to know about Probate.
