Myth 1: Everyone must go through the probate process.
Probate is the court-supervised process during which a deceased person’s affairs are wrapped up. This includes overseeing the delivery of the deceased person’s accounts and property to the appropriate individuals. However, it is important to note that the probate court only oversees the handling of accounts and property that were in the deceased person’s sole name and did not have a beneficiary, transfer-on-death, or pay-on-death designation. Therefore, if a person dies without owning any accounts or property in their sole name (i.e., everything the person owned was either owned jointly with someone else or a beneficiary, pay-on-death, or transfer-on-death designation was properly completed), there is typically no need to get the probate court involved (assuming that the deceased person was not the sole legal guardian of a minor child that now needs to be taken care of). By using strategies such as a revocable living trust, joint ownership, and beneficiary designations, a deceased person’s loved ones can avoid being subjected to the probate process.
Question 1: What is probate?
Probate is the process by which a court validates the authenticity of a deceased person’s will; appoints an executor (also known as a personal representative); and oversees the resolution of the deceased person’s affairs, including payment of outstanding bills, filing of tax returns, and transfer of accounts and property to the beneficiaries named in the will. If a deceased person does not have a will, the court will appoint an estate representative, also called an administrator, who carries out the same duties as an executor. In addition, the court must determine the deceased person’s heirs, who will receive the deceased person’s property according to state intestacy laws. The complexity and duration of this process varies from state to state. Typically, the remainder of the probate process, such as the payment of taxes and bills, is the same whether or not the deceased person had a will.
Question 2: How do I avoid probate?
Accounts and property that are titled solely in your name, payable to your estate, or do not have a beneficiary, pay-on-death, or transfer-on-death designation, will go through the probate process. There are many different strategies to avoid probate. Many people transfer their accounts and property to a revocable living trust to avoid probate. In addition, some items such as life insurance, retirement accounts, and annuities can be given to a chosen beneficiary by using a beneficiary designation. Additionally, accounts and property owned by the deceased person and one or more people as joint tenants with rights of survivorship (or with a spouse in certain states as tenants by the entirety) do not have to go through the probate process because the surviving owner automatically becomes the owner.
Question 3: Is probate bad?
Many people think so. The difficulty and expense of probate varies from state to state and from family to family because of differences in state laws, family goals and personalities, and the types and value of accounts and property involved. Many clients wish to avoid probate because it is a public process, time-consuming, and costly. However, some families and situations can benefit from probate because it is an approved legal process that gives a deceased person’s accounts and property to the intended recipients. This can be incredibly beneficial when a person dies without a will. This court-supervised process also helps ensure that the deceased person’s wishes, as laid out in a will, are carried out. If someone tries to deviate from the deceased person’s wishes, they must answer to the judge. The probate process, through which the deceased person’s debts get paid, also provides finality for families who have a deceased loved one plagued by debt.
Question 4: Why should I avoid probate?
Most people want to avoid probate because it can include high fees and costs, significant delays and stress, and public dissemination of private information. In most cases, court records are public records, so, upon your death, anyone could get a copy of your will, a list of everything you owned and its value, who will receive your money and property, and other information you may wish to keep private. The ease of accessing this information varies from state to state, and sometimes even from county to county. Some places even have online services, allowing anyone with an internet connection to see a list of your accounts, property, debts, beneficiaries, and who got what. If you are like most people, you want to keep your family affairs and finances private, so, for this reason, probate should be avoided.
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