Probate? What It Is, Process, How to Avoid
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Probate is a legal process for validating a person’s will and distributing the assets and property of someone who died. A probate court formally appoints an executor to distribute the deceased’s property to beneficiaries and pay the estate’s debts or taxes. Probate can take months or years.
Many people want to avoid probate or dread the process. The reasons can vary, but probate can sometimes be costly, complicated or take a long time, depending on the estate. However, for most people, probate tends to be fairly straightforward.
Why do you need probate?
Even if you name beneficiaries for certain assets in your will, your estate will most likely go through probate because the probate court must determine if your will is valid.
What is probate court?
Probate court is a state or local court that determines if a person’s will is valid, officially names executors or administrators to manage and distribute a deceased person’s assets and oversees the distribution process. Some probate courts also handle matters of guardianship and conservatorship.
Every state’s probate court system has its own procedures regarding the probate process, such as estate value limits and filing deadlines. The probate process is part of the public record.
How does probate work?
Although laws and procedures vary from state to state, the probate process largely depends on whether the deceased person had a will.
Probate process with a will
Here’s how the probate process often starts if the deceased person had a will.
A representative of the estate files the will and a certified copy of the death certificate with the probate court, which validates the will to make sure it is authentic. This step is easiest when the will includes a self-proving affidavit, a sworn statement signed by the author and witnesses that legally proves its validity. Without a self-proving affidavit, live testimony or a new sworn statement signed by a witness can help authenticate the will.
The court appoints an executor or personal representative of the estate. Generally, the deceased names this person in their will, and the probate court judge appoints them officially. If the will does not include those instructions, the probate court will appoint someone (usually next of kin or a direct family member) as executor or personal representative.
The court gives the executor or personal representative letters of testamentary, which serve as proof for banks and other financial institutions that the executor has permission to handle the deceased’s assets.
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Probate process without a will
If there is no will, the deceased person passed away “intestate.”
The court must hold an administrative proceeding to determine how the estate will be divided. The court will name an administrator for the estate; this person may or may not be a family member.
The estate administrator follows the probate judge's instructions on how to distribute the decedent's property and assets.
» Want to learn more? See NerdWallet’s estate planning basics
Probate steps with or without a will
The probate process typically moves forward with the following steps:
Post a probate bond. The court may require the executor of the estate to post a probate bond (also called a fiduciary bond), a guarantee that the executor will follow state laws and the terms of the will. If they fail to do so, family members of the deceased can file a claim against the bond.
Notify beneficiaries and creditors. A beneficiary is the person or persons who receive some or all of a deceased person’s assets. The executor or representative must identify and inform beneficiaries and creditors about the death. In general, creditors have a limited amount of time to respond and submit claims against the estate.
Appraise property and assets. The executor or representative must determine the value of all probate assets in the estate, typically by drafting an inventory of all personal property. Often, the executor will get some appraisals done to determine property values. Probate courts commonly look at assets including real estate, bank accounts, investment accounts, personal effects and business interests like LLCs and corporations.
Pay outstanding debts. In most cases, the first expenses the estate pays are funeral expenses and taxes. After that, the executor is responsible for paying outstanding debts to creditors who filed a claim within the appropriate time period. The executor is also responsible for disputing claims against the estate if necessary.
Make distributions to beneficiaries. The executor or representative handles distributions of any remaining assets to beneficiaries in accordance with the will. Some beneficiaries may have to pay an inheritance tax.
Close the estate. The executor or personal representative files a final accounting with the probate court. This report details all assets, debts paid and distributions to beneficiaries. If the court finds the report in good standing, it releases the executor or personal representative from their duties, and the estate is officially closed.
How to avoid probate
Have a small estate. Most states set an exemption level for probate, offering at least an expedited process for what they deem as small estates. In some cases, "small" actually can be quite large. Check your state's probate estate limits, and consider giving assets to family and friends before you die. This tactic might also trim or even eliminate future federal and state estate taxes.
Establish a trust. Property held in a trust is managed by a trustee. The trustee is obligated to distribute the assets under the terms of the trust agreement rather than through the probate process.
Make accounts payable on death. Bank and other accounts that are payable on death go directly to your designated beneficiary without going through probate, as do life insurance policies with named beneficiaries. Some states also allow similar real estate transfers, called transfer on death deeds.
Own property jointly. Making your spouse or someone else a joint owner facilitates the asset transfer without the need for probate. Some ways to hold such assets include joint tenancy with right of survivorship, tenancy by the entirety and community property with right of survivorship.
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