Probate is the legal process of settling an estate in court after you die. During probate, a Last Will and Testament (Will) of the decedent is verified, the property is inventoried, debts, bills, and taxes are paid, and everything that is left over is divided up among the beneficiaries and heirs according to the estate planning documents. Without a Will, or if your Will does not dispose of all of your property, the process is longer, includes a determination of heirship, the court-appointment of an ad litem, and will likely require court approval for many of the administrative duties, meaning more court appearances, more time, and more expense. Assuming you have a Will, if you designated a personal representative, called an executor, he or she will take charge of the probate process. If you did not specify someone to do this, the court will appoint one, and at the end of the process, a probate judge will resolve any differences. There are four basic steps to the probate process:
Four Steps in the Probate Process
The following are the four major steps involved in the probate process.
1. File Petition and Give Notice
The initial step in the probate process is to file a petition with the probate court. Here, the will is admitted for review, but if there is no will, an estate administrator will be appointed. At this point, anyone who is listed as an heir or beneficiary will be officially notified that the will is in probate. Usually, this is also announced as a public record in a newspaper, which notifies any possible creditors.
2. Inventory Property and Give Notice to Creditors
A thorough inventory is made of all the property and assets of the deceased person. This may include real property, stocks, bonds, retirement funds, business assets, and other financial assets. An independent appraiser may determine the value of non-cash assets. Known creditors will be notified by written notice, and any creditor that has a claim on any assets of the deceased person may file a claim in court.
3. Pay Debts
At this time, the estate must pay all owed taxes, debts to creditors, estate, and funeral expenses. The personal representative of the estate has the authority to sell assets to pay debts, if necessary. If there is a question about a creditor’s claim, this must be investigated, and a determination will be made by the court.
4. Transfer Legal Title
There is a waiting period that gives potential creditors to file a claim against the estate for debts owed. When the waiting period expires and bills are paid, all of the financial matters will be officially legally settled. The court is then petitioned to grant permission to transfer the rest of the assets to the beneficiaries, as the will instructed. If there was no will, the assets will be transferred according to state law.
How to Avoid Probate
If the probate process can be avoided, this may speed up the transfer of assets to beneficiaries and heirs, save money, and guard family privacy. Having a valid will can help keep probate costs and confusion to a minimum. Some steps to avoid probate are relatively easy, but some actions need the help of an experienced estate planning and probate attorney. Depending on your unique situation, one or more of these methods may be used to avoid probate.
Give Away Property
One way to avoid the probate process is to transfer property before your death. Any gifts should be clearly stated in writing, and if the gift exceeds a certain value, an additional tax may apply.
Establish Joint Ownership for Real Estate
Jointly owned property will avoid probate if a survivorship right exists. If one owner dies, the title passes directly to the surviving owner. Any property may be held in joint ownership, including motor vehicles, real estate, boats, securities, and financial accounts. It must be clearly stated that survivorship rights exist for the jointly held property.
Pay-On-Death Financial Accounts
For certain financial accounts, it may be possible to choose someone as a beneficiary in the event of death. This arrangement is called pay-on-death (POD) or in some cases, transfer-on-death (TOD). In order to designate a beneficiary, a form is filled out and submitted to the financial institution. Upon death, the funds are then transferred to the beneficiary and the account is closed. This is different than a joint account, which is a probate asset and will likely be frozen in the event of death until probate of the estate.
Contact an Estate Planning Attorney Today
If you are interested in creating an estate plan or are wondering about the probate process, consider visiting with an experienced estate planning attorney. An experienced attorney can help you create an estate plan that can avoid probate, or answer any questions that arise in your specific situation.
Comments