What is Probate?

In the simplest of terms, probate is the legal process for disposing of your property after you die.

However, “simple” isn’t the first word one thinks of when you think about probate. While probate may not always be complex, it is important to have an understanding of the process, especially if you wish to spare your loved ones from it.

So, what is Probate?

Your estate executor, also referred to as the administrator or personal representative, or the attorney that represents your estate typically starts probate. During this process, a probate court approves your will and then authorizes your personal representative to gather assets, pay expenses, taxes, etc. At the end, the executor is authorized to distribute your estate to your heirs as you instructed in your will, as well as pay attorney fees and compensate the executor.

If you have no will, you die “intestate.” Without a last will and testament, how will your assets be divided? In this situation, the probate court will look to the state’s statutory scheme to determine how to distribute your property.

How to probate an estate

Is probate the same in all states?

Probate laws vary across the country, so it’s necessary to be familiar with the laws of your state so that your final wishes can be managed efficiently. This is particularly true if you die without a will.

For example, if you are a resident of Arizona, California, Idaho, Nevada, New Mexico, Louisiana, Texas, Washington or Wisconsin, community property laws govern. (Alaska permits its residents to opt into community property laws.)

Community property laws, in general, hold that both spouses own all property obtained during marriage equally. In Nevada, for example, if you are married, the court will award your community property assets to your spouse. For separate property, probate courts will determine how your assets will be distributed using the state’s inheritance statutes.

Why should you avoid probate?

Although probate is sometimes straightforward, most people would rather avoid it. The reasons vary, but there are some familiar complaints about the process:

1. Time – Probate can be slow! In some instances, it can take years for the court to finalize an estate. This is particularly the case if it is complicated or there is a contested will.

2. Expense – It can be costly. The costs vary by state, but probate usually entails executor compensation, attorney fees and other administrative costs, such as appraisal fees. In some cases, these costs can add up quickly. The expenses are worsened if the process drags on for a while.

3. It’s Public – Since it’s a state legal proceeding, unlike Las Vegas, what goes on in probate court, does not stay in probate court. All the filed documents in the probate process become part of the public record.

How to avoid probate?

Regardless of the reason you want to avoid probate, there are steps that you can take to do just that.

Have a relatively small estate. States usually set an exemption level for probate, offering at least an expedited method for what is considered a small estate. In some instances, “small” actually can be quite large. Nevada allows the use of a small estate affidavit for estates of up to $25,000 or $100,000, depending upon whether you are the surviving spouse or not. Check your state’s probate laws for estate limits.

Give away your assets during your life. You may be able to lower your estate to a simplified or exempt probate status by reducing its amount while you are still here. But giving away too much during life is often easier said than done.

So, consider establishing a living trust. Trusts can be appealing when it comes to avoiding the probate process because property held by a trust is not part of your probate estate upon your death. Why? A trustee, not you, holds and controls the trust property, and must distribute it under the provisions of the trust agreement.

Make accounts transferable or payable on death. Bank and other financial accounts that are payable on death pass directly to your named beneficiaries without the need for probate. Some states, like Nevada, also allow such transfers of real estate.

Owning property jointly. Making someone, typically your spouse if you are married, a joint owner helps the transfer of the account without the need for probate. Some means of holding such assets include joint tenancy with rights of survivorship, tenancy by the entirety, and community property with rights of survivorship.

For most people, going through the probate process is like finding your way through a maze. The help of an experienced attorney in the state where the decedent passed away can save a great deal of frustration.

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