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What is probate and how do I avoid probate problems?
Probate ensures your assets go to the right people when you die, but it's much easier if you have a will.
When a loved one passes away, probate steps in to prove the will and ensure the person’s assets go to the correct people and all their wishes are fulfilled. Usually, probate is straightforward — but it can get complicated if there’s no will or you’re dealing with a large estate.
What is probate?
Probate is the legal process of proving a will. It involves legitimizing the contents of the will and distributing assets to the correct heirs.
It also kicks in when there’s no will and the court has to decide how to divide up the deceased’s estate.
When does probate begin?
It depends on whether or not there’s a will. When someone dies, their assets usually become part of their estate. If they left a will, a probate judge assesses the will and determines its legitimacy. If no one contests the terms of the will, it then directs probate — a.k.a how the assets should be distributed. Once the will has been proved, its terms are executed by the “executor,” the person you nominated to represent your estate.
If the deceased didn’t leave a will, the court will decide who is entitled to the assets. They’ll then assign an administrator to manage probate.
How probate works when there’s a will
If the deceased left a will, these are the steps you’ll need to follow:
- File the petition. It all starts with paperwork. A petition must be filed with the probate court to appoint the executor and validate the will. Typically, a family member completes the petition, and the required documents include a death certificate, the original will and an application from the court clerk.
- Appoint the executor. The court schedules a hearing to officiate the executor and confirm the will. Creditors and beneficiaries are notified and invited to attend. In most cases, it’s just a formality, but if someone wanted to contest the appointed executor, this would be their chance.
- Validate the will. As part of the first hearing, the court decides whether or not the will is legitimate. Typically, all that’s needed is a word from its witnesses — a notarized statement, sworn statement, or court testimony.
- Notify creditors. The executor writes to the estate’s creditors to inform them about the death. There’s a limited window of time in which the creditors can make a claim on the deceased’s assets.
- Take inventory. It’s the executor’s job to locate everything the descendant left behind, including stocks, property, bonds and bank accounts. An independent appraiser can be hired to help.
- Pay back debts and taxes. After assets are accounted for, the executor must decide whether or not the creditor’s claims are legitimate. Then, all the bills connected to the estate must be paid. If more cash is needed, items may have to be sold. The executor must file taxes, accounting for the decedent’s personal income in the last year of their life, and any taxes owed on the estate. The estate’s assets should pay for this.
- Distribute the estate. Finally, the executor petitions the court, asking permission to give beneficiaries what’s theirs, as dictated by the will. Stocks and property are transferred to the appropriate owners and assets are liquidated or doled out. The will has officially been carried out.
What’s the probate process without a will?
If there isn’t a will, authority over the assets goes straight to the courts. From there, the intestate laws determine the order in which property is passed on to relatives. The court can also appoint an executor to manage debt repayment and asset liquidation.
The laws vary between states, so double-check the laws in the state the deceased resided in.
Which assets aren’t part of probate?
There are a few types of assets that don’t go through probate. These include:
- Life insurance policies with a payable-on-death beneficiary
- Bank accounts
- Retirement funds
- Trusts — the money is distributed according to the terms of the trust.
How much does probate cost?
If you had a small estate and a well-written will, it’s possible that your loved ones won’t have to pay anything for probate.
But if your estate is large or complicated, they may run into some costs. These are determined by each state’s probate code, and may include:
- Cost of the executor. The executor is doing a job and needs to be compensated for their services. In some states, executors can claim a percentage of the estate as their fee — for example, in California, the rates start at 4% of the first $100,000.
- Court filing fees. If your estate is valued at a certain amount, your executor will have to file probate with the county clerk — which charges a filing and/or administrative fee.
- Attorney fees. Depending on your state, your attorney may charge an hourly rate or collect a percentage of the total estate value.
- Creditor notice fee. Your stater may require your executor to post a notice in the newspaper announcing your death so that creditors can claim the money they’re owed. Many newspapers charge a fee for this filing.
- Probate bond. Most states require the executor to buy a probate bond, which ensures the value of your estate.
How long does the probate process take?
It can take anywhere from 30 days to several months, depending on:
- The size of the estate
- The clarity of the will regarding the estate
- How complicated the estate is to split up
- How quickly creditors come forward to claim assets
- The pace at which the executor makes decisions
If people contest the will or the court’s decisions, the probate process can drag on for months or even years.
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Is my estate exempt from probation?
Every state has exemption laws for small estates, which expedite the probate process. This is known as “simplified probate.” To activate it, each of their heirs need to sign an affidavit and either file it with the county clerk or the institution that holds the assets, such as a bank.
Once the affidavit is accepted, the assets are transferred to the rightful heirs — and this process is called “summary administration.”
Simplified probate limits for each state
Each state defines small estates differently based on their value. Some states factor in property and vehicles in their calculations, too.
To be classified as a “small estate,” this is the maximum amount your estate must be worth. If your estate is worth less than the maximum, you can qualify for simplified probate.
|State||Maximum value of the estate|
|Alaska||$100,000 for vehicles|
$50,000 for any other personal property
|Arizona||$75,000 for personal property $100,000 for real estate|
|Georgia||$10,000 of cash a bank or credit union|
All other assets must go through probate
|Hawaii||No limit on vehicles|
$100,000 for all other property
|Maryland||$50,000 in general, or $100,000 if the surviving spouse is the only heir to the estate|
|Nevada||$25,000, or $100,000 if there is a surviving spouse.|
|New Hampshire||Simplified probate is available for all estates, depending on the terms of the will.|
|New Jersey||$20,000, or 50,000 if there is a surviving spouse or domestic partner.|
|North Carolina||$20,000, or $30,000 if the surviving spouse is the sole heir to the estate.|
|Ohio||$35,000, or $100,000 if the surviving spouse is the sole heir to the estate.|
|Oregon||$275,000 — of which $200,000 can be real property and $75,000 can be personal property.|
|Pennsylvania||$80,000, not including real estate|
|Tennessee||$50,000 in personal property|
|Vermont||$10,000 if the decedent doesn’t own real estate (timeshares are exempt)|
Probate ensures your assets are managed in an orderly fashion after you’re gone — but it can be a time-consuming and expensive process. To make it easier for your loved ones to access your assets later on, it’s worth investing some time in estate planning, which might include securing life insurance and establishing a private trust.
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