Probate is the process in which a deceased person’s estate is distributed to the beneficiaries. Part of the probate process is making sure that creditors are paid with assets. State probate laws vary, but the legal process generally includes appointing someone to administer the estate, inventorying the estate’s assets, validating the will, if there is one, appraising the assets, paying debts and taxes to finally distributing the assets to the beneficiaries.
The probate process can take six months or longer, depending on the complexity of the estate and each aspect of the process. Probate isn’t inexpensive. There are court fees that may need to be paid. Generally, the administrator of the estate, or executor, is paid a small fee for his or her time. Having a will doesn’t mean that the estate will avoid probate. Here are some things to think about if you want to avoid probate.
What Does Your Estate Look Like?
Not all assets enter probate. Life insurance policies that have a designated beneficiary are considered non-probate assets. You may have a bank account with a specified beneficiary or that has another owner, which may keep it out of probate.
Some states have a simplified version of probate for small estates, allowing families to bypass some of the formalities of probate court. This can save time and money, but it depends on how many assets the deceased person has and the legal status of each asset.
Real estate is often kept out of probate when it is held jointly with a right of survivorship. When you and your spouse own a home jointly, the home will pass to the spouse on your death automatically. If you and another person are both listed on the property as owners, it doesn’t matter whether you’re married or not. It is important to make sure this ownership is designated properly before a death.
Bypassing Probate With a Trust
Large estates often use living trusts to transfer assets. With a living trust, the person with the assets creates a trust with the assets. The owner, or trustee, retains control over the assets while he or she is alive. When the trustee dies, the trust retains the assets, thus, there is no reason for the trust to go through probate, because it is still “alive.” The trust passes on to the next generation of owners who now retain control of the estate.Smaller estates can benefit from a trust, but the cost may be prohibitive.
Discuss Your Estate With Your Attorney
An estate planning attorney can help you plan for the future of your beneficiaries by discussing your options under the law. You might be able to avoid probate and its associated costs just by planning ahead.