Probate
What is it and When does someone have to do Probate?
Probate is a process in which the court steps in to ensure the deceased person’s estate is managed properly. It is also a formal process in which ownership in assets is transferred from the deceased to the beneficiaries/successors.
If the deceased person executed a Will, the court will determine whether the Will was properly executed, complying with all the requirements of the state. If there is no Will, the probate process determines the heirs of the deceased person.
Probate is only applicable after death.
Senario 1:
Jack has a daughter named Sally and owns a home in which his name is the only name on the property. Jack passes away. At the time of his death, Sally survives him. According to Jack’s will, he leaves the home to his daughter Sally.
Sally now has to probate Jack’s estate in order for the property to transfer to her.
Not all property and all estates have to go through probate. It all depends on whether the deceased had “non-probate” assets. Non probate assets include:
- Property held as joint tenants with rights of survivorship.
- Retirement accounts if there are designated beneficiaries
- Life insurance policies if there are designated beneficiaries
- Bank accounts if the account is held jointly, if the accounts have pay on death designations or in trust designations.
There ways to avoid some assets from going through probate. While probate may not be avoided completely, there are various techniques that can be used to limit certain assets from being probated. Usually these probate considerations are discussed when developing an estate plan.
Why would someone want to avoid probate? Depending on the size of the estate, if there are creditors, the types of assets in the estate, etc., probate can take some time. More importantly, until the estate is probated, the deceased’s assets are off limits. Avoiding probate can save money as it can minimize attorney’s fees and court costs. Because probate is a formal process with the court, a probate action has to be initiated with the court, which can costs couple hundreds of dollars.
