You’ve probably heard the word ‘probate’ at some point or perhaps you know someone who had to endure the probate process after the passing of a family member or loved one.
The term ‘probate’ is typically used in one of two ways: it can refer to the process the probate court goes through to determine if a will is valid and authentic, including if there is a contest is filed to contest the will’s validity. More frequently, it is used to refer to the formal legal process for administering the estate of a person who dies ‘intestate’ (without a will).
If there is no will, the probate court must collect the assets of the decedent and determine how liabilities will be paid and what assets, if anything remains, will be distributed and to whom the assets will be given. The probate process for an intestate decedent can be very time-consuming and expensive because the court must appoint a person to administer the estate and the administrator and his/her attorney can charge service fees. According to some sources, the overall cost of probate can range from 2 to 7% of the value of the estate and the average estate can take 16 months to complete probate. Among the costs of the probate process are court filing fees, probate bonds, creditor notice fees including newspaper publication costs, and executor and attorney fees. Ultimately, the court must decide who gets what when the decedent has died without a valid will and the estate is required to go through the probate process.
Probate with a Will
If a person dies with a will, the person named in the will as the personal representative/executor for the decedent must obtain the death certificate and then ‘lodge’ ( file ) the will with the court. If the court finds the will to be valid, then the executor named in the will is put in charge of shepherding the will through the probate process by marshalling estate assets, paying off creditors and other estate liabilities, including any estate and personal income taxes, and distributing any remaining assets to beneficiaries named in the will.
Probate without a Will
If the decedent has died without a will, then the court must appoint an administrator to oversee the marshalling any estate assets, paying bills and distributing anything that remains. To make any distribution, the administrator must locate any legal heirs of the deceased person including spouses, children and parents. The probate court will decide who is entitled to what, according to a strict formula as set forth in state intestacy laws. If the decedent doesn’t have a will and no heirs, any property remaining goes to the state.
As a general rule of thumb, the more complex the estate, the higher the cost and the more time required to probate the estate, whether with a will or without a will. Further, the probate process is a public record so there is no confidentiality of how the estate assets are handled.
Some assets such as pension plans, life insurance proceeds, 401k retirement plans and individual retirement accounts (IRA) can sidestep being dumped into the probate process because they typically have named beneficiaries making probate unnecessary. However, other assets may be tossed into probate unless the decedent looked ahead before his/her passing and utilized an instrument such as a trust to bypass the probate process.
Avoiding Probate with a Valid Will and Trust
One of the most effective means of sidestepping much of the lengthy, public and expensive process that is probate is to use a professional estate planning attorney to help you craft a valid will that allocates estate assets to a trust. Trusts are handled outside the probate process and they can be used effectively to more quickly pass assets to beneficiaries and to avoid much of the expense, delay and hassle of probating an estate.
The attorneys at Business Estate and Tax Attorneys P.C. are experienced at constructing a variety of distinct trust instruments, depending upon the needs of the person setting up his/her estate plan. While a discussion of trust instruments is beyond the scope of this blog post, the reader is encouraged to contact one of our attorneys to discuss the probate process and how the creation of a valid will and family trust may save the time, money and emotional problems that are typically consumed in the probate process.
Disclaimer: The information in this article is for general purposes only, and it is not intended as a substitute for legal advice.