Many people have strong feelings about probate and want to avoid it, but they do not always succeed. Probate is the legal process used to settle a person’s estate after death. It generally involves identifying the deceased person’s assets, paying outstanding debts and taxes, resolving claims, and distributing the remaining property to beneficiaries or heirs.
Although probate is often viewed as complicated, understanding the basic steps can make the process easier to navigate. The specific requirements, timelines, and costs vary by state, so families should understand the laws that apply to the estate.
What Happens During Probate?
During probate, the court may:
- Validate the deceased person’s will, if one exists
- Appoint an executor or personal representative
- Identify and value estate assets
- Notify creditors and address outstanding debts
- Resolve disputes or claims involving the estate
- Pay applicable taxes and expenses
- Distribute remaining assets to beneficiaries or heirs
However, not every asset necessarily has to go through probate. For example, certain jointly owned assets, life insurance proceeds with designated beneficiaries, retirement accounts, and assets held in some types of trusts may transfer outside the probate process.
Probate Steps in Detail
While procedures differ by state, probate commonly follows several steps:
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Filing the will and opening the estate. If the deceased left a will, the person responsible for administering the estate typically files it with the appropriate probate court. The court then determines whether the will is valid and officially opens the estate. If there is no will, the person died intestate. State intestacy laws generally determine who inherits the estate.
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Appointing a personal representative. The court appoints an executor named in the will or another qualified individual to administer the estate. This person is responsible for carrying out many of the estate’s legal and financial duties.
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Identifying and valuing assets. The personal representative must locate the deceased person’s property and determine which assets are part of the probate estate. This can include bank accounts, real estate, vehicles, investments, business interests, and personal property. Assets may need to be appraised or otherwise valued for estate administration and tax purposes.
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Notifying creditors and paying debts. The estate generally must address valid debts and expenses before remaining assets can be distributed to beneficiaries. Depending on state law, creditors may have a limited period to submit claims against the estate. The personal representative reviews those claims and pays valid obligations using estate assets. It is important to note that family members generally do not automatically become personally responsible for the deceased person’s debts simply because they are heirs. However, there can be exceptions, including debts for which another person was a joint borrower or co-signer.
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Resolving taxes and other obligations. The personal representative may need to file the deceased person’s final income tax return and, depending on the size and circumstances of the estate, additional tax returns. Other expenses, such as funeral costs, court costs, property maintenance, and professional fees, may also need to be addressed.
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Distributing the estate. After debts, expenses, and required taxes have been handled, the remaining assets can generally be distributed according to the will. If there is no valid will, distribution typically follows the state’s intestacy laws. These laws establish which relatives are entitled to inherit and in what proportions.
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Closing the estate. Once the representative has completed the required tasks and distributed the estate, the probate case can be closed. The representative may need to provide the court with a final accounting or other documentation before the court formally closes the estate.
How to Avoid Probate
Some people use estate-planning strategies designed to allow certain assets to pass directly to beneficiaries without going through probate.
Avoiding probate does not necessarily mean avoiding all court involvement. It also does not mean that an estate will have no taxes, debts, or other obligations after death. Instead, the goal is generally to arrange ownership and beneficiary designations so that qualifying assets transfer automatically or through a simplified process. Several strategies may help accomplish this.
Create a Revocable Living Trust
A revocable living trust is one of the most commonly used estate planning tools for avoiding probate. With a revocable living trust, a person transfers ownership of certain assets to the trust during their lifetime. The person who creates the trust can generally remain in control of the assets and can serve as the trustee. They can also change or revoke the trust during their lifetime, subject to the terms of the trust and applicable law.
After the person dies, the successor trustee can generally distribute the trust’s assets to the beneficiaries according to the trust’s instructions without putting those assets through the traditional probate process.
However, simply signing a trust document is not enough. Assets generally need to be properly transferred or titled in the name of the trust for the trust to accomplish its intended purpose.
Use Beneficiary Designations
Certain financial accounts and insurance policies allow an owner to designate beneficiaries who will receive the assets after the owner’s death.
Common examples include:
- Life insurance policies
- 401(k) plans
- Individual retirement accounts
- Certain investment accounts
- Pension and retirement benefits
- Bank accounts with payable-on-death designations
When a valid beneficiary designation is in place, the asset can generally pass directly to the designated beneficiary rather than becoming part of the probate estate.
Establish Payable-on-Death Accounts
Payable-on-death, or POD, designations can allow money in qualifying bank accounts to transfer directly to a named beneficiary after the account owner’s death.
The account owner generally retains control of the money during their lifetime. After death, the financial institution can transfer the account’s remaining funds to the designated beneficiary after receiving the required documentation.
Contact Us Today
Probate can be complex. There are a lot of rules and deadlines involved, and it can be hard for the average person to navigate on their own.
Have questions about probate? The Law Office of Philip M. Flanigan, P.C. has the answers you need. We have more than 30 years of experience handling probate and trust administration. We work to resolve your legal troubles quickly. Call (559) 517-3948 or fill out the online form to schedule a consultation.