What Is Probate?
Probate is not a tax, nor is it a system for states to directly collect money from your estate. Probate's purpose is to orchestrate and oversee the transfer of an estate.
Typical processes during probate include:
- Assets and liabilities are inventoried,
- Notices of the deceased's passing are made public
- Creditors make claims for outstanding debts requiring repayment
- Heirs contesting the estate are given a chance to state their case
- Any applicable estate taxes are paid
- Income tax returns are prepared, filed and paid
- The estate is transferred to the beneficiaries
Avoiding Probate
Depending on a number of factors, probate can both delay the transfer of the estate and potentially become expensive depending on attorney fees.
The state(s) in which the deceased owned assets often dictates the time and cost of probate. If the deceased owns assets in multiple states, separate probate proceedings may be required in each state. Each state has its owned rules of when probate must occur and procedures which can vary in length.
The size of the estate affects when probate is triggered in each state. Attorneys may calculate their fees based on the size of the estate. Attorney fees (if an attorney is hired to assist) are often much higher than probate fees charged by the state.
Should someone the estate, the probate process could be drawn out over weeks, months or years depending on the complexity of the contest.
Subject to Probate
Not all assets are subject to probate.
First, any asset with a beneficiary listed will avoid probate. Examples include:
- Life insurance
- Bank accounts
- 401(k)'s
- IRA's
- Annuities
Most financial institutions allow for a POD (Payable On Death) or TOD (Transferable on Death) designation. Check with your financial institution. The beneficiary of an account can be a person or a living trust.
Second, any asset properly titled in a living trust BEFORE the deceased's passing will avoid probate.
Assets in a testamentary trust do not avoid probate because a testamentary trust is created by a last will & testament AFTER the deceased's passing.
Third, any asset held jointly with someone who survives the decedent will avoid probate.
Fourth, in many states the value of the probatable estate must reach a certain financial level to trigger a formal probate. For example, in Arizona estates with less than $75,000 of real property in the deceased's name or $50,000 of non-real property (art, jewelry, vehicles, etc.) will avoid a formal probate.
Probatable assets include any assets without beneficiaries listed that are in the deceased's name and without any type of rights of survivorship to a co-owner of the asset. Assets placed in a living trust are not part of the probate estate.
Check with your county's or state's website to learn more about the probate process.
Probate Attorney?
If you are assisting with the probate of an estate and need assistance from a probate attorney use the search bar below with the words "probate attorney yourcity".
Talk to several probate attorneys before selecting one to handle the estate. Ask questions about their experience, their fees and the process in the state the probate is being held.
