What Is Probate?
Technically “probate” means the act of proving someone’s will; it is more fully defined as, “the legal process that officially proves the validity of a will. This includes an inventory of the decedent’s property, resolving all debts and claims, and distribution of the decedent’s estate.” (Black’s Law Dictionary). More generically it refers to the process of handling a deceased person’s estate, whether they had a last will and testament or not.
What Factors Set The Stage For Probate To Happen?
Anytime someone dies or passes, you need to consider whether or not formal probate through a probate court is necessary. Probate can be necessary regardless of whether they had a last will and testament or not.
Is Probate Necessary?
Normally probate is necessary where there are assets that do not pass at someone’s death automatically. What do I mean by that? Let’s discuss some specific examples. I like to talk about the assets that most people have, which are a house, cars, bank accounts, and retirement accounts.
Joint bank accounts normally pass automatically. That is to say, if two or more persons’ names are on a joint account, when one of them dies, the other person or persons automatically get to keep what is in the account. Also, sometimes a banking institution will have or allow you to put a “payable on death” or “POD” provision in place, which says who gets your account if you die. But if your account is not joint and does not have a POD provision, the only way to get to it will be through the formal probate process.
When it comes to retirement accounts, like IRAs or 401(k)s, usually the person will be asked to and has designated who the account will go to upon their death – they have designated one or more beneficiaries and the account will pass according to those instructions without any probate being needed.
Automobiles can usually be transferred to heirs of the deceased directly through the Department of Driver Services without having to go through probate. You have to bring a certified copy of the death certificate and the registration information to the DDS.
If the person who dies had a house or real estate, you have to look at the deed. If the deed was in the name of the deceased person and someone else with right of survivorship, then upon the death of one of those two, the property automatically belongs to the other person without having to do anything through probate. However, if the deed was not a survivorship deed, then probate will be necessary to pass the title of that property, whether it is according to a will or according to the law if there was no will.
What Are My Options For Avoiding Probate?
As described above, to avoid probate or to simplify it, consider doing a survivorship deed if you have a spouse or partner you want to get your home or real property upon your death. But keep in mind that once you do that, you cannot undo it unless the other person agrees to deed it back to you.
For bank account and retirement accounts, ask the bank or institution if you can do a POD or payable on death provision to say who it goes to on your death.
Some people use living trusts to avoid probate. Think of a trust as being a separate bag or pool of assets. A “trust” is established by a document that appoints someone to be the “trustee” or caretaker of whatever assets you put into the trust, and which also names a “beneficiary” or “beneficiaries” for whose benefit the assets are to be managed. The trust spells out what should be done with those assets while you are alive and also tells what should happen to them on your death. Normally you appoint yourself as the trustee to take care of your own assets while you are alive for the benefit of yourself as the beneficiary, and you designate someone else to become the successor trustee and to carry out the trust instructions on your death for the benefit of whomever you designate. Trusts have pluses and minuses to them, and you really need to speak with an attorney to see if they are right for you. It is also very important to consider tax implications and to speak with a certified public accountant or other tax professional in making these decisions.
Probate is not always the big, bad burden that people make it out to be. And even if you have a trust, I tell people they still need a will in case there are on or more assets out there that they forget to put into the trust or that exist outside the trust.
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