Estate Planning and Probate
When a person deceases, whatever assets that person owns will either pass through probate or they will not. Probate is the legal way to transfer the assets of someone who has deceased, and involves the use of probate court proceedings. Probate occurs primarily in two scenarios; first, when the deceased executed a will during his/her lifetime (testate), and second, when the deceased did not execute a will (intestate). If the deceased legally and effectively executed a will, then the probate courts will transfer the decedent’s assets according to that will. If there was no will, then the probate court will transfer the assets according to state intestacy laws. It is possible that part of the decedent’s assets go through probate and part of them do not (partial intestacy).
Consequences of Probate
Understanding the probate process is important for every person because of the consequences that result from probate proceedings. One of the consequences that might arise from probate is not having your estate and assets transferred to whom you want and/or in the way you want. Those who do not execute a will leave their entire estate up to the probate courts. Even those who execute a will still must go through probate, although the probate courts will administer the estate in accordance with the will; however, wills that are not properly executed can still leave assets that go through probate. Another consequence of probate is that it usually is time consuming. Most of the time, probates will take anywhere from nine months to two years or more, depending on the size of the estate. Even smaller estates can take many months or more to go through the probate process. A further consequence of probate is that it is often costly. Between filing everything with the courts, attorneys fees, and other costs, probate could substantially diminish an estate.
Ways to Avoid Probate
Although there are advantages to probate, those advantages are just as effectively, if not more so, attainable through means other than probate. A useful and common way to avoid probate is to do some estate planning, including creating a living trust. Livings trusts allow people to protect their assets from probate and transfer them to whom they want and in the way they want, without going through probate.
Another way to avoid probate is hold an asset in joint tenancy. Joint tenancy allows the survivor to automatically take complete title to the asset in joint tenancy in the event the other joint tenant deceases. A further way to avoid probate is to hold assets that designate valid beneficiaries, such as IRA’s, 401K’s, and annuities. Upon the death of the owner of such an asset, the beneficiary will usually take the asset free of probate. Probate can also be avoided for small estates, pursuant to state probate statutes.
Normally, probate should be avoided and the most efficient way to do so is through estate planning.Although we have touched on some of the basics of the probate process and its consequences, there is more to probate than what is discussed in this article. Our law firm can help you understand the probate process better and how to utilize estate planning to avoid it.