Where Does My Property Go After I Die?
The deceased person is also known as "the decedent." Estate administration is a court-supervised process. It's designed to sort out the transfer of the decedent's property after death. A fiduciary or personal representative will handle this process from beginning to end. It's a part of their estate administration duties. Tasks can include:
- Filing tax returns
- Collecting assets (personal property and real property)
- Taking an inventory of the decedendecedent'sty
- Managing the decedendecedent's
- Settling any debts and paying any income taxes
- Distributing any remaining assets
Some property passes automatically to another party upon death, such as family members in a joint bank account. Property subject to transfer-on-death instructions would go to the named beneficiary.
Probate Process When You Have a Will
You may have heard of "probating a will." This refers to a will presented to the court that fulfills the legal requirements of a last will and testament. The decedent's property can be transferred to beneficiaries during the probate process.
The probate court then considers the directions written in the will during the probate process. If nothing is illegal or overridden by other laws, the court divides the property according to the deceased's wishes and distributes the remaining assets to named beneficiaries.
Probate Process When the Will Is Contested
Probate may be contested or uncontested. There may be a disgruntled named beneficiary seeking a larger share in contested probate or a family member not named in the will who challenges the validity of the last will and testament. In these situations, the probate court must sort out the legal and factual arguments raised by the various parties.
Probate Process When the Will Is Not Contested
The probate of most estates is uncontested. In these cases, the estate administrator collects the property, pays debts, including income and estate taxes, settles disputes, and transfers the remaining assets to the named beneficiaries or heirs.
Estate Administration Process When You Don't Have a Will
A person who dies without making a will is called "intestate." Following the decedent's death, distributing estate assets through intestacy may be more complex without a valid will. When a decedent dies without a will, state law relating to intestate succession determines who will receive your assets. Most people would rather make that determination on their own. To avoid intestacy, you must create a valid will.
Avoiding Probate Court: Common Methods
Probate court proceedings are often criticized as being costly and time-consuming. To this end, avoiding probate court can help ensure beneficiaries receive their benefits promptly and with minimal loss from unnecessary administrative costs and legal fees.
Several estate planning approaches attempt to avoid probate proceedings in probate court. These methods seek to reduce or eliminate probate assets so there is no probate estate at death. These methods include the following:
Certain trusts, life insurance policies, and "Totten Trusts" (payable-on-death accounts) can also avoid probate proceedings. This occurs through transferring ownership to the beneficiary before death or automatically upon the creator's death.
Each of these processes has benefits and drawbacks. After learning the basics, it is advisable to research each option more thoroughly. This helps avoid creating new problems while attempting to eliminate probate court issues.
Avoiding Probate Court: Joint Property Ownership and Death Beneficiaries
Jointly owned property with a "right of survivorship," also called "joint tenancy," can avoid probate court proceedings. The deceased joint owner no longer owns the property after death, leaving only the surviving owner. For example, a decedent could own real estate through a joint tenancy, and the real property would go to the surviving owner at the decedent's death by operation of law.
Assets that permit you to designate a beneficiary upon death are called "death benefits." They may also avoid estate administration. It is typical for retirement accounts, such as IRAs, to pass through beneficiary designations.
Avoiding Probate Court: Revocable Living Trust
Revocable living trusts function similarly to joint property ownership. Upon death, the property automatically transfers to the beneficiary. At the decedent's death, the property isn't part of the decedent's estate when estate administration occurs.
Avoiding Probate Court: Gifts
Gifting property to others before death allows the gifted property to avoid estate administration. The deceased person no longer owns the property at death. With thoughtful estate planning, personal gifting can be a powerful tool to remove certain assets from your estate.
Avoiding Probate Court: Small Estate Affidavit
Some small estates can be settled in some states by a simplified or summary process. This simplified process for a small estate typically involves a signed legal statement called an "affidavit" to settle the estate. A sworn affidavit can prevent a small estate from going through the probate process. This document swears a person can inherit a property item or asset. The threshold for a small estate depends on your state laws.
Avoiding Probate Court: Probate Exemptions
Probate Court may be avoided through the use of a probate exemption. Exemptions allow for probate avoidance or a simplified estate administration process for smaller estates. In some states, probate court proceedings are eliminated or simplified for property left to the surviving spouse.
When To Call a Probate Attorney
The probate process can feel confusing — regardless of the size of the estate. Seeking legal advice about general probate laws, or applying the laws to your own estate, can bring you peace of mind. Finding a local attorney focusing on probate is an excellent first step. Many attorneys will offer a free consultation to explain the estate planning process.