A Look at Probate
The term ‘Probate' refers to the process of transferring the estate of a decedent, a person who has died, to their beneficiaries. The court administers, distributes and protects this process. Probate of a decedent's estate includes ensuring if there is a will and if it is valid. It also determines the identity of the decedent's heirs, appoints an executor, and appoints an administrator to act on behalf of the estate in case if and when there is no will. Then the court collects the probate assets, pays debts, claims and distributes the remainder of the assets to the estate beneficiaries.
The probate administration may have minimal court involvement in case of an independent administration, or be subject to the court’s supervision in a supervised administration.
How Probate Works
Probate is the analysis and transfer of estate assets previously owned by a deceased person. At the point when a landowner bites the dust, his benefits are generally inquired by a probate court. The probate court gives the last decision on division and distribution of resources for recipients. A probate proceeding normally is started by inspecting whether the expired individual has prepared a legitimized will.
Probate with a Will
A deceased person who has provided a will is known as a testator. When a testator dies, the executor of the will initiates the probate process. Typically, the executor is a financial advisor and the will includes essential details of a specific executor.
After the death of a testator, the executor files the will with the probate court and thus initiates the process. Probate process is a court-supervised proceeding where the authenticity and validity of the will is judged and accepted accordingly. If the will is found valid, it is considered as the true last testament of the deceased. So the court officially appoints the executor mentioned in the will. The executor, then, takes all the necessary legal actions for distribution and cost and debt management on behalf of the deceased.
Probate Without a Will
When a person dies without a will, he is said to have died intestate. Also this is true when a will presented in court is proved to be invalid, then it will be considered an intestate estate. The probate process for an intestate estate includes distributing the decedent’s assets according to state laws. If a deceased person has no assets, probate may not be necessarily applicable.
Generally, a probate court proceeding begins with the appointment of an administrator to check the estate of the deceased. The administrator functions as an executor. He receives all legal claims against the estate and pays off all debts.
The administrator is responsible for locating any legal heirs of the deceased, including surviving spouses, children, and parents. The probate court will assess and decide what assets need to be distributed among the legal heirs and how to distribute them. In most states, the probate laws prioritize the surviving spouse and children of the deceased while dividing property.
Spouses as Joint Property Owners
Community property laws can recognize both spouses as joint property owners in an intestate proceeding. Accordingly, the distribution hierarchy typically starts with the surviving spouse. But in case of the testator being unmarried or widowed at the time of death, assets are usually divided among any surviving children. After considering a spouse and children, other relatives may be considered for distribution.
Is a Probate Always Required?
Different states have different laws regarding probate and the requirement of probate after the death of a testator. Some states have a specified estate value which requires probate. For example, probate laws in Texas hold that if the value of the estate is less than $75,000, then probate may be skipped. The estate’s assets may be claimed using alternative legal actions like an affidavit. In this case, the estate is small enough to bypass the probate process. Typically, if a deceased person’s debts exceed their assets, probate is not necessarily initiated and alternative actions may be undertaken.
Some assets can escape probate because beneficiaries have been initiated through contractual terms. The processes or planning which already has included designated beneficiaries does not need to be probated, such as pension plans, life insurance proceeds, 401k plans, medical savings accounts, and individual retirement accounts (IRA). Similarly, assets jointly owned with a right of survivorship can avoid the probate process. Another popular way to bypass probate is through the use of a trust.
The probate process is a lengthy process. If your heirs need their inheritance immediately to pay for college, immediate medical bills, or other daily activities, they may face financial hardship. Moreover, the expenses increase while waiting for the probate process as well. For example, if there is real estate involved, most likely a mortgage and homeowners’ insurance needs to be paid on a house even if no one is possibly living in there. Depending on the duration of the probate process and the amount of the home’s expenses, the problem of time can add steeply to the cost.
The legal procedures are steep with expenses. Costs and fees are different when there is a Will and when there is no Will. If there is not a will or when there is a will, but its validity is challenged, the estate administration price will be comparatively high. According to the American Bar Association, probate and administrative fees can consume between 6% and 10% of a person’s estate. That percentage is calculated before any deductions or liens are taken out.
Pets are also considered as property. With a will, you get to decide who will be taking care of your pets after your death, just like the other things such as your couch or paintings. You can either direct in your will or your trust for pets. For using a trust, you need to establish how you want your pet taken care of, and allot sufficient funds for that purpose.
4. Lack of Privacy
The probate court proceedings are a matter of public record. Anyone can go to the courthouse and can find out the information regarding what you left to the heirs and what your debts were. Lack of privacy is evident in the probate process.