The purpose of probate is to establish clear title or ownership to assets after death. Probate is the legal way to take a name off title of an asset and put another name on it after death. Probate is a method of transferring assets as provided in a will (testate), or, if a person dies, without a will (intestate), in accordance with state law.
Is Probate Always Needed?
The size of the estate determines whether it will be probated. If the value of real property (land or home) including personal effects exceeds $150,000, the estate will go through probate. If the estate is under the allowed limit, a simple affidavit procedure may be substituted for the lengthy and costly probate process. Since most people have assets valued over $150,000, most estates must be probated.
Do All Assets Go Through Probate?
Not everything in a person’s estate automatically goes through probate. For example, assets held in a living trust avoid probate. Also, a jointly owned asset, such as a bank account, that transfers to the surviving spouse will generally avoid probate while the surviving spouse is alive. However, after the second spouse’s death the asset may have to go through the probate process.
Also, assets with valid named beneficiaries such as insurance policies, IRA’s and annuities, avoid probate as long as the beneficiary is alive.
Assets in the deceased’s name alone must be probated to transfer title. Community property must be probated if it is left by will to someone other than the surviving spouse. The deceased’s share of assets owned as tenant in common must be probated, as well as, life insurance, annuities and retirement assets without beneficiary designations or the beneficiaries are deceased.
What Happens In Probate?
The process depends on whether or not the deceased left a will. If there is a will (testate), and it names someone to be appointed as executor, then that person, usually with the assistance of an attorney, files with the court to be appointed executor and to admit the will to probate. Notice must be given to persons named in the will, all known creditors of the deceased, and the deceased natural heirs. If the deceased left no will (intestate), the court appoints an administrator on a probate proceeding.
The executor or administrator must collect the assets of the estate that are subject to probate, pay debts and death taxes, and request court approval to transfer assets to the decedent’s heirs or the persons named in the will.
The executor or administrator will prepare an inventory and appraisal, file tax returns, settle creditor’s claims, and distribute the estate.
How Long Does It Take To Probate An Estate?
For most estates, probate of an estate takes nine months to two years. The size and complexity of the estate determines the duration of the probate process. If there is a conflict between the heirs or the beneficiaries, the process can take longer.
What Is The Cost Of Probate?
There are two kinds of fees that are paid by the estate: statutory and extraordinary fees. Statutory fees are established by the state legislature and are calculated as a percentage of the gross value of probate assets, plus income receipts and net gains on sale of assets during the probate administration. The attorney and the personal representative are each entitled to statutory fees: 4% of the first $100,000, 3% of the second $100,000 and 2% of the next $800,000, 1% of amounts above $1,000,000.
For example, the probate of a $600,000 estate entitles the attorney a fee of $15,000 and the executor earns a fee of $15,000, therefore, the total statutory fee for a $600,000 comes to $30,000, excluding extraordinary fees.
What Are The Advantages Of A Probate Proceeding?
The advantages of a probate proceeding are that the heirs and beneficiaries are protected by the court. A probate proceeding cuts off the claims of creditors and clears title to property. In addition, questions and disputes are settled under the jurisdiction of the court.
What Are The Disadvantages Of A Probate Proceeding?
The disadvantages of a probate proceeding are that it is costly, time-consuming, and lengthy. Probate proceedings, as court proceedings, are inherently inflexible because the court controls the process. All probate transactions are a matter of public record; therefore, there is a lack of privacy.
Is There An Alternative To Probate?
The expense and duration of probate is the reason many people execute living trusts. A living trust is a way to protect ones heirs and beneficiaries from the cost, stress and time lost in probate court. Most people want to consider ways to avoid probate, and yet ensure that their assets are protected for their family and beneficiaries by creating a trust. Administering a trust should be done with the help of an attorney to make sure all the estate assets are transferred into the trust properly and that the intent of the trustor is carried out.