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 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 are valid. The court can then settle the deceased’s Estate according to that individual’s instructions and the state’s specific probate and intestacy laws.
What is the Purpose of Probate?
The primary 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 essential because different laws and processes are associated with higher-valued estates.
Is Probate Necessary?
Probate is a necessary legal requirement after someone dies and there’s a will. Before distributing items listed in a Last Will and Testament, the Will must 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 process that can be used (in most states) to quickly move through the court system when the deceased’s Estate is below a specific value. A small estate affidavit can further help speed up summary probate.
Additionally, some assets 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 chosen state to follow the Uniform Probate Code (UPC). Even though the UPC was initially meant to be adopted by every state — most states haven’t. And even states adopting UPC still have unique laws governing the probate process.
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 (the estate executor) must 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 ensure that the deceased’s last Will is authentic and valid. Authenticating a will can take time, depending on the estate’s size and the Last Will’s terms.
4) Post Probate Bond for the Estate
A probate bond allows the Estate and its beneficiaries to be reimbursed in case of fraud, incompetence, or mishandling during the probate process. In their Last Will and Testament, a probate bond isn’t always required and can be requested or waived by the deceased.
State laws vary on who must pay the probate bond fees (the executor or the estate). Still, any refundable fees are returned to the purchaser once the estate has been closed unless something goes wrong during probate.
5) Notify Creditors and Heirs
Once the probate process begins, all beneficiaries of the Estate and 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 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 the estate owe are paid in full once the probate process is finalized.
8) Distribute Remaining Assets
The final part of the probate process will distribute any remaining assets, like money and property, to their rightful beneficiaries. Property distribution is determined by the Will left behind by the deceased. The probate court will decide who gets what if there is no will.
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, suppose any recipients dispute their inheritance. In that case, their dispute must be settled in court, increasing the cost and time it takes to process the Will.
An estate tax, or probate tax, is imposed by the federal government in addition to each state’s various estate and probate taxes — all of which determine how much money is collected during probate.
In Oregon, for example, a graduated estate tax begins at 10% of the Estate’s value and maxes out at 16%. However, there is a tax exemption for the first 1 million dollars.
California recently tried to update its 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 the Last Will must go through probate and be appraised before it can change hands, and all debts and taxes must then be collected.
The Last Will also instructs the court of your final wishes, and they will determine if the executor can carry out those wishes legally. Clear instructions will streamline the 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 constantly 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.” Each state has its guidelines for how to settle an intestate estate. Typically, all assets clearly and solely in the decedent’s name — like houses, vehicles, or land — will be distributed based on the state’s intestate succession laws.
These succession laws prioritize surviving spouses and next of kin and allow those individuals to inherit the deceased person’s property. If you can’t identify beneficiaries, the state will usually take control of the property and either auction it off or dispose of it.
Suppose the thought of your loved ones spending an unreasonable amount of time tied up in court is unpleasant. In that case, you can avoid probate altogether with a living trust. Trusts aren’t public records or governed in the identical way wills are, and they can frequently bypass probate.
A revocable 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 yearly on your taxes.
As the name suggests, a revocable trust can be revoked, giving you flexibility in your estate planning.
Before deciding which is right for you, you must understand the differences between trust vs. Will and revocable vs. irrevocable trust.
How Long Does Probate Take?
Simply put, probate takes a long time — a very long time.
It can take up to two years for large estates to finish the probate process. According to the American Bar Association, average estates are settled between six and nine months.
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?
Depending on your state, you’ll typically have between 10 days to 3 months to file probate after death. However, some states don’t have deadlines unless there is 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.
We’ll all likely have to deal with the probate process. A better understanding of probate — why it exists and how it works — can help alleviate some of the stress and uncertainty of losing someone close to you.