Probate sounds like a complex and expensive process. However, probate is actually a very common legal procedure and is the way that some assets must be formally passed from the person who is deceased to his or her heirs or beneficiaries. Whether probate is needed depends on the type of property, how it is owned, and what the state laws are.
What Does Probate Mean?
Probate is a procedure through which assets are legally passed. For very large estates, the probate process can be a complex procedure. However, for most people, it's a very simple formality.
Probate is really just a judge giving legal permission for assets to be passed on, whether or not there is a last will.
When Does Probate Apply?
Most people think of probate as involving a will. If a person dies and leaves a will, then probate is required to implement the provisions of that will.
However, a probate process also can happen if a person dies without a will and has property that needs to be distributed under the state intestacy law (the law of inheritance). If the decedent owned an account that named a beneficiary (such as a retirement account) but the beneficiary has passed away before the owner of the account, probate law requires that account to go through the court so that the funds can be passed to the person legally entitled to them under state law.
Can’t You Skip Probate?
Some people don’t want to probate a will. There is no requirement that a will or property go through probate, but if the decedent owned property that is not arranged specifically to avoid probate, there is no way for the beneficiaries to obtain legal ownership without it. There are some exceptions to this. Florida law allows a family to own property in a decedent’s name if they continue to pay taxes and do not sell it.
What Is a Small Estate Probate Process?
Most states recognize that a full probate process can be expensive and time-consuming. Because of this, small estates are usually eligible for a simplified process that generally does not require use of a probate lawyer.
In West Virginia, for example, if the decedent’s estate is less than $100,000, a small estate probate process is used. These types of procedures make probate court accessible to most families and encourages people to create wills.
How to Avoid Probate
It is possible to avoid probate entirely with careful planning. This is desirable for some people because doing so not only reduces legal fees, but it can mean avoiding the estate tax, which can take a significant amount of a very wealthy estate. Avoiding probate can also protect privacy, since some of the records may not be available to the public.
One of the most popular ways to avoid probate is through the use of a revocable living trust. Assets are placed in the trust, but they can used by the trust creator during his or her lifetime. Upon death, assets in the trust are passed to the trust beneficiaries just by operation of the trust document. No probate is necessary.
Life insurance policies pass property outside of probate. Whoever you name as beneficiary on your life insurance policy will receive the death benefit directly with no probate process.
Some retirement accounts can pass outside of probate. The account owner names a beneficiary and that person then receives the balance of the account after the owner’s death. Payable on death accounts operate the same way.
Real estate that is owned as joint tenants, or joint tenants by the entirety passes outside of probate as well. This type of property has two owners. When the first owner passes away, the second one automatically owns the property.
Most families will have some contact with a probate court whether or not a will was created, but in most cases, the process is streamlined and inexpensive.