The term probate refers to a legal process in which a decedent’s estate is distributed, under the supervision of a court. The probate process generally involves:
- Determining the validity of the decedent’s will;
- Documenting the decedent’s property;
- Ensuring that taxes and debts owed by the decedent’s estate are paid; and
- Distributing assets according to the decedent’s will, or state laws.
Generally, the probate process is handled by a probate court. The purpose of a probate court is to oversee all matters involving the decedent’s estate, such as estate administration and guardianships of an estate. Local probate courts may go by other names including Chancery Court and Surrogate Court.
The probate process is controlled by state law, and therefore varies from state to state. Many states have permitted a simplified probate process for smaller estates. An example of this would be how Texas does not require probate for estates that do not exceed $50,000. A large number of states have adopted the Uniform Probate Code, or “UPC.”
The UPC is a set of model laws that specifically address issues related to wills, trusts, and estates. The UPC was created in order to streamline the probate process, as well as make estate and probate administration easier and more cost effective.
How Can I Avoid the Probate Process?
There are a few different ways to distribute a decedent’s estate that does not involve the probate process. Some of these include:
- Joint Tenancy: This is a type of property ownership in which two or more people own part of a property. When a joint tenant dies, the remaining joint tenants inherit the decedent’s share of the property, as opposed to the decedent’s heirs inheriting the share. Joint tenancy is typically associated with the legal co-ownership of a home, car, or bank account. The property’s co-owner automatically receives full ownership of the asset without having to first go through the probate process in order to pass the title. There are specific conditions that must be met for joint tenancy to exist;
- Life Insurance Policies: Life insurance policies in which a person pays a premium each year and names a beneficiary may circumvent the probate process. The named beneficiary automatically receives the life insurance policy benefits and payout when the policyholder dies; and
- Trusts: Trusts involve transferring the legal title of an asset to a trustee. When the estate owner dies, the named trustee is bound to distribute the decedent’s property according to the terms of the trust. There are several different types of trust intended for different purposes.
What Are the Pros and Cons of Avoiding the Probate Process?
The main advantage to avoiding probate is cost. Probate costs generally include attorney’s fees, and can be costly, especially if the decedent owns property in a different state. This is due to the fact that probate proceedings would be required in both states, although a trust would likely correct this problem. Trusts can also be tailored to meet specific requests, which is not necessarily true of the probate process. Because the execution of a trust is much less formal than that of a will, the terms of a trust can easily be changed to suit the needs of the estate.
Another advantage to avoiding the probate process is that the process can be complicated, as well as time consuming. Probate can take up to several years to completely resolve all matters related to the decedent’s estate. Avoiding the process can help settle things more quickly.
Another advantage to avoiding the probate process is privacy. Wills and probate proceedings are matters of public record. If you would prefer to keep your affairs private, and that people not involved do not know how your estate was distributed, you will need to distribute your estate through a trust or some other estate planning mechanism.
There are some disadvantages to avoiding probate that you should consider. In general, it costs slightly more to create and fund a trust than it does to create a will. However, as previously mentioned, it could save money in the long run by avoiding paying probate costs out of the estate. Additionally, in order to completely avoid the probate process, you must carefully place all new assets you obtain into the trust. Otherwise, probate may still be necessary. Finally, taxes can be a bit higher for the first years after your death if the estate is distributed through a trust, as opposed to a will.
Do I Need an Attorney for Avoiding the Probate Process?
As with any estate planning, you should consult with a skilled and knowledgeable probate attorney. An experienced probate attorney can ensure you understand your state’s laws regarding probate and estate distribution, as well as advise you of your best estate planning options.
Additionally, an estate attorney can also advise you regarding the best possible estate plan suited for your needs and the size of your estate. Finally, an attorney can represent you in court, should any dispute arise.