Death is a personal and private affair that affects the deceased’s close family and friends. However, there is at least one aspect of death that may require state oversight: probate. Probate is the court-supervised process of either (a) carrying out the instructions laid out in the deceased’s will or (b) applying state law to distribute a deceased’s accounts and property to their family members if the deceased did not have a will.
The main purpose of the probate process is to distribute the deceased’s money and property in accordance with the will or state law. Not all wills, and not all accounts and property, need to go through probate court. And just because a will is filed with the probate court does not mean a probate needs to be opened. Whether or not probate is necessary, most state laws require that a will be filed when the creator of the will (testator) passes away.
Understanding Probate, Wills, and Estates
Estates, wills, and probate are distinct, yet interrelated, estate planning concepts.
- An estate consists of everything that a person owns—including their personal possessions, real estate, financial accounts, and insurance policies. Virtually everyone leaves an estate when they die.
- A will is the legally valid written instructions describing how one wants their money and property distributed upon their death. Wills are highly recommended, but there is no legal requirement to have one. To make a will legally valid, it must be properly executed in accordance with state law. Executing a will involves signing the document in front of witnesses. Additionally, at the time of signing, the creator must have capacity (i.e., be of sound mind).
- Probate is the legal process that formally distributes the accounts and property that are in the decedent’s sole name, do not have a beneficiary designated, and have not been placed into a living trust prior to the decedent’s death. During probate, a decedent’s probate assets are identified and gathered and their debts are paid. Then, the probate assets are distributed to beneficiaries named in the will or their heirs as determined by state statute if there was no will.
Probate with a Will
Assuming that a decedent does have a will, here is how probate typically proceeds:
- The person nominated in the will to act as executor (sometimes called the personal representative) files a copy of the death certificate, the original will, and any required documents or pleadings with the probate court. If the person nominated in the will does not file these documents with the court, state statute will determine who else has priority to make such filings (possibly another family member, an attorney, or even a creditor of the decedent).
- The court examines the will and other documents filed to confirm their validity and gives the named executor the legal authority to carry out the decedent’s wishes, as specified in their will. This legal authority is conferred in a court-issued document called letters of authority, letters testamentary, letters of administration, or another similar name.
- The individual appointed as executor inventories and values the decedent’s estate assets and identifies any outstanding debts of the estate, such as loans and credit card debt.
- Once estate debts are paid, the remaining accounts and property are distributed to named beneficiaries and the estate is closed, ending the probate process.
The length of a probate can vary depending on many factors, including the size of the estate, state laws, and whether the will is deemed invalid or contested.
Avoiding Probate
Sometimes, avoiding probate altogether can shorten the amount of time it takes to wind up a deceased person’s affairs. There are also other reasons to avoid probate. This includes keeping probate filings out of the public record and saving money on court costs and filing fees.
Beneficiary designations, joint ownership, trusts, and affidavits are common ways to avoid probate. Here are some examples of these probate-avoidance tools in action:
- Pensions, retirement accounts like 401(k)s, and other accounts that allow for designated beneficiaries may not need to be probated. Transfer-on-death (TOD) and payable-on-death (POD) accounts are generally treated the same as accounts that have a beneficiary designation.
- Accounts and property that are jointly owned and have a right of survivorship can bypass probate.
- Accounts or property held in a trust may also bypass probate. But trusts are not without administrative and cost burdens. If the deceased forgot to transfer ownership of an account or piece of property to the trust, a pour-over will may be needed. These wills can transfer those accounts and property to the trust through the probate process upon the trust maker’s death.
- Some states have laws that allow probate to be skipped if the value of an estate is below a specified value and does not contain any real estate. The threshold value for qualifying for this exception varies.
Filing a Will versus Opening Probate
Filing a will with the probate court and opening it are separate actions. A will can be filed whether or not probate is needed. In fact, some states require it. Remember that probate is needed only under certain circumstances. Some state laws require the person who has possession of a decedent’s will to file it with the court within a specified time after the date of the decedent’s death. The consequences for failing to file it vary by state but may include being held in contempt of court or payment of fines.
The person in possession of a will might also be subject to litigation by heirs who stand to benefit from the estate under the terms of the it. The latter also applies if the will-holder files a will but does not file for probate. Failing to file for probate (when it is necessary) prevents inheritances from being properly distributed. These legal consequences are usually imposed only on a will-holder who willfully refuses to file a will. If someone you love has passed away and you have their will, we recommend that you work with an experienced probate attorney. Look for one that can help determine whether probate must be opened and whether the will needs to be filed.
Avoid Probate Issues When Drafting a Will
Probate avoidance may be one of your goals when creating an estate plan. You should also consider implementing tools in your estate plan to minimize issues that may arise if your estate does require it.
Your will may have been written years ago and might not reflect current circumstances. You could have acquired significant new accounts or property. There may have been a birth or death in the family. You may have chosen an executor who is no longer fit to serve. An outdated or unclear will can spell trouble when it is time to probate your estate. This makes it important to identify—and address—issues that could lead to problems, including will contests and disputes.
It is recommended that you update and review your estate plan every three to five years. It is also recommended to do so whenever there is a significant life change. You cannot be too careful when stating your final wishes. For help drafting an airtight will that avoids possible complications, please contact us.
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