After losing a loved one, the last thing anyone wants to deal with is a lengthy court process to determine who receives their property. Yet many people have to do just that in a procedure known as probate.
If you’re unsure what probate is or even why it’s necessary, this guide will walk you through all the details.
What is Probate?
Probate is the legal process of verifying in court that a deceased person’s last will and testament is valid. The court can then settle the deceased’s estate according to that individual’s instructions, and the specific probate and intestacy laws of their state.
What is the Purpose of Probate?
The main purpose of probate is to make sure that:
- the deceased’s property is correctly distributed to their beneficiaries.
- all outstanding taxes and debts are properly paid off.
Another reason an estate goes through probate is to appraise the value of all property contained in the will. This appraisal is important because there are different laws and processes associated with higher valued estates.
Is Probate Necessary?
Probate is a necessary legal requirement after someone dies and there’s a will. Before items listed in a last will and testament can be distributed, the will must first go through the court system to prove its validity.
However, there are actions you can take to minimize the probate process:
“Summary probate” is a simplified probate process that can be used (in most states) to quickly move through the court system when the deceased’s estate is below a certain value. A small estate affidavit can further help speed up summary probate.
Additionally, there are some assets that don’t necessarily need to be processed in probate court:
- Jointly-owned property or real estate, including property with right of survivorship clauses
- Life insurance payouts
- Pension plan payments and retirement accounts
- Property or funds registered in a transfer- or payable-on-death form
- Unclaimed salary or wages (up to a certain amount based on the state)
How the Probate Process Works
How the probate process works depends on whether you live in a state that’s chosen to follow the Uniform Probate Code (UPC). Even though the UPC was originally meant to be adopted by every state — most states haven’t done so. And even states that have adopted UPC still have their own unique laws governing how the probate process works.
However, most jurisdictions handle probate through these eight steps:
1) Submit An Affidavit of Death and Death Certificate
When a person dies, the first step is to submit the official death certificate (occasionally, alongside an affidavit of death) to a county court.
2) Appoint An Executor or Representative
Next, a representative (known as the executor of the estate) will need to be assigned to the probate case. This representative is authorized to handle the legal affairs of probate, such as signing court documents, or appearing before a judge on behalf of the estate.
A lawyer or court-appointed official will typically be given this role unless the deceased explicitly appointed an executor in their will.
3) Authenticate the Decedent’s Last Will and Testament
Once an executor is appointed, the probate court will then make sure that the last will and testament of the deceased is true and valid. This step can take time depending on the size of the estate and the terms of the will.
4) Post Probate Bond for the Estate
A probate bond allows the estate and its beneficiaries to be reimbursed in the event of fraud, incompetence, or mishandling during the probate process. Probate bond isn’t always required, and can be requested or waived by the deceased in their last will and testament.
State laws vary on who is required to pay the probate bond fees (the executor or the estate), but unless something goes wrong during probate, any refundable fees are returned to the purchaser once the estate has been closed.
5) Notify Creditors and Heirs
Once the probate process begins, all beneficiaries of the estate as well as any creditors that are owed money from the estate must be contacted.
6) Determine the Value of the Estate
After the entire estate is cataloged, a probate court must assess the value of each individual item. This part of the probate process takes the longest unless the estate is small.
7) Pay Attorney Fees and Creditor Debts
Executor costs, attorney fees, and all debts owed by the estate are paid in full once the probate process is finalized.
8) Distribute Remaining Assets
The final part of the probate process will be to distribute any remaining money and property to their rightful beneficiaries. Property distribution is determined by the will left behind by the deceased. If there is no will, the probate court will decide who gets what.
The Cost of Probate
While the exact cost of probate varies depending on the state, you can generally expect to pay the following when going through the probate process:
- Court costs
- Attorney and executor payments
- Appraisal and accounting fees
Probate costs can become expensive quickly, but not every estate will necessarily need to hire accountants or lawyers. The size of the estate determines how many people need to be involved. The more assets included in a will, the more professionals it takes to correctly account for and distribute those assets.
Additionally, if any recipients dispute their inheritance, their dispute must be settled in court as well, further increasing the cost and time it takes to process the will.
Probate Tax
An estate tax, or probate tax, is imposed by the federal government in addition to the various estate and probate taxes of each state — all of which determine how much money is collected during probate.
In Oregon, for example, there is a graduated estate tax which begins at 10% of the value of the estate and maxes out at 16%. However, there is a tax exemption for the first $1 million dollars.
California recently tried to update their estate tax law, but the new law didn’t pass. As a result, California is one of the few remaining states with no estate tax.
Furthermore, some states impose an inheritance tax, which is paid by the beneficiaries of an estate upon receiving their items.
Do All Wills Go Through Probate?
Yes, all wills need to be supervised and processed by a probate court. Property contained in a will must go through probate and be appraised before it can change hands, and all debts and taxes must then be collected.
A will also instructs the court of your final wishes, and they determine if those wishes can be carried out legally. Having clear instructions will streamline the entire court process, and help save your beneficiaries time, money, and stress.
With that said, there are certain non-probate assets sometimes outlined in a will that don’t need to go through probate:
- Property such as homes and vehicles that have more than one legal owner
- Money distributed through a life insurance policy
- Wages or salaries that were unclaimed upon the death of the decedent
Furthermore, you can always update your will with a codicil to will form if you want to remove any assets previously documented in your last will which would be subject to probate.
Removing assets subject to probate from your will and placing them in a living trust further protects your beneficiaries by helping them avoid probate on those items.
How Does Probate Work With No Will?
When a person dies without a will, it’s known as “dying intestate”. Typically, all assets that were clearly and solely in the decedent’s name — like houses, vehicles, or land — will be distributed based on the state’s intestate succession laws. Each state has their own guidelines for how to settle an intestate estate.
These succession laws assign priority to surviving spouses and next of kin, and allow those individuals to inherit the property of the person who has died. If beneficiaries can’t be identified, the state will usually take control of the property and either auction it off or dispose of it.
Avoiding Probate
If the thought of your loved ones spending an unreasonable amount of time tied up in court is unpleasant, you can avoid probate altogether with a revocable living trust. Trusts aren’t public record or governed in the same way wills are, and they can frequently bypass probate.
A living trust helps manage the assets you put into it during your lifetime. It can accrue interest on any financial assets (like stocks and bonds), and must be reported on your personal taxes each year.
As the name suggests, a revocable trust can be revoked at any time — giving you flexibility in your estate planning.
Make sure you understand the differences between a trust vs will and a revocable vs irrevocable trust before deciding which one is right for you.
How Long Does Probate Take?
Simply put, probate takes a long time — a very long time.
For large estates, it can take up to two years to finish the probate process. Average estates are settled between six and nine months, according to the American Bar Association.
Either way, you can expect to wait the better part of a year before all of the estate property is distributed to the rightful heirs.
How Long Do You Have to File Probate After Death?
You’ll typically have between 10 days to 3 months to file probate after death, depending on the state you live in. However, some states don’t have deadlines unless there was a will on record, such as Nevada.
Don’t procrastinate filing your documents. The probate process can’t begin until the deceased’s will is filed with the probate court. You may even be held accountable for not filing for probate quickly enough if the deceased owed money to any creditors.
Final Thoughts
The probate process is something we’ll all likely have to deal with in our lifetimes. Having a better understanding of probate — why it exists and how it works — can help alleviate some of the stress and uncertainty that comes with losing someone close to you.
