In this article
- 1 What probate means
- 2 How to determine if probate is necessary?
- 3 When is probate not necessary?
- 4 Avoiding probate as legal procedure: Different possibilities
- 5 How do I set up probate?
- 6 How much does a probate lawyer cost?
Last Updated on September 27, 2022 by Carlos Lopez
For everyone, – even for us – passing away means leaving possessions and assets behind that must be organized and retitled to appropriate heirs. The legal process to do this is known as probate, which in many cases is necessary as another matter to deal with for loved ones in grieving times.
Now, there is much more than meets the eye when it comes to this legal affair.
For instance; is probate always mandatory? What characteristics determine if probate is needed or not? How is the process and how long does it take? Let’s find out.
What probate means
In more details, probate refers to the process of acknowledging, authenticating and administering a deceased´s estate, after he or she unfortunately has passed away.
Undergoing this procedure involves three main purposes:
- To comply with decedent’s taxes and debts,
- To confirm executor´s or representative´s authority, and
- To fairly distribute estate as inheritance to proper beneficiaries, also known as creditors.
There are two things to clarify when it comes to this matter. First, estate refers to all of the possessions, related properties, belongings and money in general owned by the deceased.
Second, probate applies with or without a will, although this one facilitates the process.
Actually, having a will makes a huge difference respecting probate. You see, the legal personal representative – or executor – is designated by the testator or will maker while still alive.
Also, the will states clearly about how the estate will be distributed.
On the other hand, when the probate process involves intestacy – a person who dies without a will – the legal procedure takes longer and becomes more complex.
For instance, the administrator´s designation and their authority to organize and distribute intestate, as well as appoint beneficiaries is given by a probate court, according to local laws and jurisdiction.
How to determine if probate is necessary?
Determining if probate is necessary in case of the dead of a loved one or relative depends on different aspects. Such conditions differ from one state to the other and their corresponding jurisdiction.
However, you should know that in most cases estate that is not properly planned out will undergo probate. This if conditions in relation to amount of assets and type of possessions, as well as their current ownership status and others are reached.
Specific cases where probate becomes necessary after your loved one or relative has passed away are:
- Amount of assets: depending on the jurisdiction and state, if the decedent owned certain amount of assets that added together give a specific sum of money. In the state of New York estates surpassing $50,000 must go through probate, while in California the sum must reach $150,000.
- Bank accounts and properties entitled in sole name: for administrators and executors to be able to distribute assets in bank accounts and in the form of properties, real estate and other belongings entitled to the deceased, a probate is required whether a will is present or not.
- Non-title property: all types of non-title property must go through probate, including household items and personal objects. Usually, having a will offers the benefit these non-title properties can be excluded from a probate process.
- Partner-owned property: in case the decedent at the moment of dead owned a partner-owned property with another person, a probate court will perform the corresponding process with the intention of providing fair share to creditors.
When is probate not necessary?
As mentioned before, a probate is necessary in terms of jurisdiction, type of assets, their value and ownership status as estate in general.
Depending on it, the process may turn out more or less complex, even when having a will made by the testator.
Like this, in some specific cases there is no need of a probate process, which is quite convenient in the majority of times. Or, at least some estate’s assets in general are excluded due to their nature, ownership or sort, making the procedure less time-consuming and simpler.
Actually, there are a few ways and strategies you can apply to avoid probate entirely, but more on that later.
A few of the situations when probate is not necessary are:
If the jurisdiction where you are located handles criteria for probate that considers the sum of total assets as small estate, it is possible the procedure does not apply. Such a threshold depends on the state, going from $50,000 as in Nebraska to $150,000 dollars as it happens in California.
Jointly owned property
Property that was jointly owned by the decedent and another party with survivor´s right transfers automatically after the dead.
For example, community properties like in marriage and also in joint tenancy do not require probate, since the survivor takes ownership of the deceased´s part automatically. It involves from bank accounts and real estate to insurance policies.
Property with a designated creditor
If a property of any kind is designated directly to a beneficiary in life or in a will, it will not require probate and ownership will transfer automatically to the creditor.
Life insurance policies with listed beneficiaries are again great examples of this exception of probate, as well as investment and regular bank accounts and also retirement funds with TOD or POD – Transfer on Dead and Playable on Dead – respectively.
Assets placed in a living trust or similar fund
Trusts work as asset planning and preservation tools that can be used to avoid probate, since at the moment of death technically the deceased did not own such assets.
Therefore, beneficiaries are able to inherit goods directly and with no need of any legal process.
Actually, the trust funder can choose between revocable or irrevocable trust, as those types that allow or forbid to manage assets freely or only when the trust maker dies.
Pension benefits usually do not fall into mandatory probate territory, due to scheme trustees.
Usually, the only requirement for the scheme trustee to release pension fund money is that a proper representative is designated during the person’s lifetime.
If not, the trustee is in right of demanding a grant of probate to make sure money is given to a fair executor or legal representative.
Avoiding probate as legal procedure: Different possibilities
While every probate case is different and it depends on the decedent’s tax debt, estate size and beneficiaries, they usually tend to be time-consuming and expensive.
As such, following different strategies to avoid probates completely are actually quite convenient, at the same level as creating a will during lifetime. Some of these are:
- Reduce total estate: the best and most practical way of getting rid of probate is by reducing your total estate, by putting properties and assets in the relatives´ name during lifetime. This has a double benefit, as federal and state taxes reduce at the same time following inheritance processes after dead become easier.
- Start using a trust fund: trust funds are great financial and asset planning tools to use in life and after it. Every asset in the trust skips probate, since technically it was not the decedent´s property at the moment of dead, being managed by a trustee that will follow previous trust agreements.
- Make accounts and other assets POD or Playable on death: making real estate – in some states – as well as banks account and retirement funds Playable on death means that when the owner die, a previously stablished beneficiary directly receives ownership or right to administer the account.
How do I set up probate?
A probate process follows a series of steps that may differ from jurisdiction to jurisdiction, although every procedure broadly includes four main stages:
- Filing for probate or initial stage: to begin with, an application is issued to the probate court, acknowledging the case and appointing the executor established in the will or administrator in case there is none. With every beneficiary notified, an administrator is chosen in the hearing and objections will be taken.
- Estate inventorying stage: having chosen the executor or administrator, it is their job to start inventorying the total estate and calculate its true worth. Estate includes properties and real estate, liquidity in bank accounts, insurance and even stocks, as well as debt, liabilities and pending taxes.
- Payment of debt: for the process to continue, the related debt must be paid out in the upcoming months. It is possible for the debt to be paid off using estate funds or even assets.
- Estate distribution: the last stage is the estate distribution between beneficiaries listed in the will, or declared next-of-kin by the court in case of intestate. Administrators and executors must file complete debt settlements with accountable records, so distribution becomes effective.
How much does a probate lawyer cost?
The actual cost related to probate lawyers depends greatly on the type of case, jurisdiction, gross value of the estate and the method the lawyer and you choose to pay.
Paying by the hour in small towns and counties is usually $150 on average, surpassing the $250 fee per hour in big cities.
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At Lopez Law Firm LLCWe have optimal expertise in cases of estate administration following the death of a person. Schedule your consultation today!