What is probate? Probate is a legal process that involves paying off a deceased person’s debts and transferring their property to heirs and loved ones. It can take time and be expensive, so it’s important to understand what probate is and how to avoid it.
Why do you need probate?
To start the process, the executor of the estate files the death certificate and will with the court. If there is a will, the court authenticates it and determines if it meets all the requirements to be the true last will and testament of the deceased. Then the court appoints an estate administrator to manage the deceased’s property and distribute assets.
In some states, the administrator must buy a fiduciary bond to ensure they do what’s best for beneficiaries. These bonds typically cost a percentage of the estate and can add up quickly. Court fees and taxes are also part of the picture. Then there are the costs associated with notifying creditors and beneficiaries, which may include placing announcements in local newspapers.
If there is no will, the court steps in to determine who receives the estate by default. Typically, this is the spouse and children of the deceased. Then the other heirs get whatever is left over.
Some assets never enter probate because they pass to another person contractually, such as the death benefit from a life insurance policy or a bank or brokerage account that is legally held “jointly owned with right of survivorship.” Other assets may avoid probate if the Will specifies beneficiaries and they are properly named, or if the assets are in a trust.