Probate is the legal process for distributing a deceased person's property to their heirs and beneficiaries and settling any debts. The probate process carries out the instructions in a person's will. If there's no will, it follows state law.
Types of Assets Subject to Probate
When someone dies, their money, property, and possessions—otherwise known as assets—fall into two broad groups for probate purposes. The first group of assets passes directly to a co-owner or beneficiary upon the original owner's death. These assets generally don't go through probate. Common examples include:
- Retirement and pension accounts that have beneficiaries
- Proceeds of life insurance policies
- Payable-on-death accounts
- Real estate co-owned with a joint tenant who has a right of survivorship
- Assets held in trusts
The second group of assets doesn't go directly to a beneficiary or co-owner. They may be passed down through a will, or through state laws of intestacy if there is no will. Examples can include:
- Money in bank accounts
- Real estate
- Personal possessions
Without the probate process, heirs and beneficiaries usually can't take legal ownership of these assets. As a result, probate is often necessary even if there is a will.
Steps to Probate a Will
Though the exact process varies by state, probate follows several basic steps:
- A petition is filed in probate court. The probate judge will appoint someone to administer the estate. The administrator (or executor) is usually named in a will, but the court will appoint someone if no will exists. Notice of the petition must be given to heirs and beneficiaries, and usually must also be published in a local newspaper.
- Creditors are notified and given a deadline to submit claims. The executor identifies and inventories the deceased's person's property. If necessary, the property is appraised.
- Any debts or taxes owed by the deceased are paid.
- The remaining assets are distributed according to the decedent's wishes if they left a will, or according to state law if not.
After assets have been distributed, the probate is officially closed. However, even after probate is closed, the executor may be responsible for dealing with any complaints or newly discovered assets.
Several factors can influence how long probate takes, including the estate's size and complexity, the state the decedent lived in, and whether anyone objects to the probate petition.
Avoiding Probate Court
Probate can sound complicated and intimidating, but for most people, it's a relatively straightforward process. Some states even have simplified probate procedures that allow you to settle a small estate without probate lawyers.
The benefit of probate is that it provides an orderly process to inventory assets, pay debts, and get assets to heirs. But you might want to structure your estate plan to avoid probate as much as possible for the following reasons:
- Privacy. Probate files are public court documents.
- Estate taxes. An estate may be subject to state estate taxes even if it doesn't owe federal estate taxes.
- Owning property in more than one state. This means there would be a probate proceeding in each state.
- Large or complex estate. This may make the probate process longer or more expensive.
One way to avoid probate is to set up a revocable living trust and place your assets in the trust.
If you've been named executor of a will, it's worth exploring what a probate lawyer can do for you. In addition to helping determine whether probate is necessary, a lawyer can handle legal paperwork and advise you on the steps you need to take.