Probate is the process by which the court determines how an estate is broken up and given to beneficiaries. If a person dies with a will (testate), the court determines the validity of the will, and if there are no objections, employs the appointed executor to carry out the final expenses of the estate and distributes the estate (after expenses) according to the wishes of the owner’s will. If a person dies without a will (intestate), a court-appointed person settles the financial problems of the estate, and the court distributes remaining property in accordance with the laws of the state. Most states’ laws closely resemble the 1990 Uniform Probate Code. While some states differ greatly, the majority of intestate states in the U.S. are directed according to the Probate Code. The Code gives priority to close relatives instead of distant ones. These include the spouse, descendents, parents, descendents of parents (siblings, nieces, and nephews), grandparents, and descendents of grandparents (aunts, uncles, and cousins). Under the Code, adopted descendents are treated the same as biological descendents. If none of the listed people qualify to accept the estate, then the entire estate goes to the state.
The Code breaks up the estate for close relatives as follows:
The surviving spouse receives the entire, or a substantial part of the, estate (after taxes and expenses). In some cases, the estate is broken up differently, for example; if the owner of the estate has surviving descendents while the surviving spouse does not, the spouse receives the first $100,000 while the descendents receive the rest.
The parents receive the estate if the owner is not survived by a spouse or descendents.
Other relatives (owner’s parent’s descendents) receive the estate in case there is no spouse, descendents, or parents. If there are no descendents of the owner’s parents, the estate is divided between owner’s grandparent’s descendents, etc.
The typical cost of a probate will range from between 3% to 7% of the total value of the estate.
Probate avoidance is very popular in states where the process is either too slow or too costly. In other states, the process is quite efficient, so there is not reason to avoid probate. Check with an attorney to see if your state’s probate process should be avoided. People often opt to avoid probate by dividing their estate into trusts instead of creating a will (also read “Examples of non-probate property?” to learn about more about ways to avoid probate). Lawyers often advocate revocable trusts as the most common probate avoidance technique. Meet with an experienced attorney to make certain that no parts of your estate will be left to probate in the event of your death.
Some types of property are allowed to forgo probate at the time of one’s death. If any real, personal property is jointly owned, it passes to the surviving owner without going through probate at the time of the other owner’s death. In addition to a joint ownership of personal property, other benefits are also transferred to beneficiaries without going through probate. A life insurance policy and a directly payable annuity are both exempt from probate, as well as IRAs, 401(k) accounts, and Keoghs (tax-deferred retirement plans for the self-employed). These accounts all transfer automatically to the named beneficiaries at the time of the owner’s death.
If you are interested in avoiding probate, also read information concerning trusts, since certain trusts also allow property from a person’s estate to pass to heirs without going through probate.
The first thing you should do is hire a probate lawyer. The probate process is very drawn out and confusing; the only way to assure that your loved one’s estate ends up in the right hands is by hiring a probate lawyer to help with the process.
If your loved one died testate (with a valid will), the probate process should not be too difficult. The court needs only to validate the will and then make certain the property is passed on in accordance with the will owner’s wishes. Still, it is important to have probate lawyer present who can correctly interpret the will and expedite the probate process.
If your loved one died intestate (without a will), the probate process will most likely be long and difficult. The probate court will need to determine how the estate is divided among descendants according to the laws established in that particular state. Hiring a probate lawyer in this situation is strongly recommended to make certain, again, that your loved one’s estate is appropriately divided among descendants.