Probate avoidance is a hot topic to reduce estate taxes, save money on probate attorneys, and speed up estate administration. This article explains the probate process and how you can structure your estate.
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Table of Contents
What is Probate?
Probate is a court process that administers a deceased person’s estate. During probate, a deceased person’s debts are paid, and their assets and personal property are distributed.
Is Probate Bad?
The probate court’s oversight of an estate’s administration protects the estate and the interests of the deceased person. The probate process and its court proceedings ensure that assets are distributed correctly and that the estate’s debts are paid. Probate without a will is time-consuming and expensive. Preparing a will helps your loved ones by streamlining the probate process resulting in diminished probate court and attorney fees.
How Probate Works
1. Court Filing
If the decedent had a will naming a personal representative, then the personal representative initiates the probate process by filing the decedent’s will and death certificate with the probate court. The will becomes a public record. If the decedent died intestate, meaning they did not have a will, the court initiates probate proceedings following probate laws.
2. Will Validation
If the decedent had a will, the next step is for the probate court to examine that will. The court will review the will to ensure that it is authentic and meets all of the relevant states’ legal requirements for a validly executed will.
3. Appointment of a Personal Representative or Administrator
A person is appointed to represent the estate. If there is a will naming a person to serve in this role, the court officially appoints the named party to the position. This role is a personal representative or an executor. If there is no will, the court will appoint someone to serve in this capacity, and the appointed party is known as the estate’s administrator.
4. Administration of the Estate
The appointed personal representative, or administrator, is responsible for administering the estate. Estate administration involves:
- Giving notice to people with an interest in the estate.
- Paying the debts of the estate.
- Distributing the assets of the estate.
The court may require the personal representative to post a probate bond to protect the estate. The estate pays the cost of this bond, but if you have a will, you can elect a personal representative that you trust and waive this bond requirement.
5. Close of Probate
When the personal representative has finished administering the estate, they may close the estate with the court’s permission. To complete probate, the personal representative must file a report with the court known as a final accounting. This report will detail for the court the actions that the personal representative has taken on behalf of the estate, such as paying debts and distributing assets to beneficiaries.
Ways To Avoid Probate
The more probate assets you have, the longer the probate process will take. You can streamline the probate process by doing some estate planning to prevent certain types of assets from going into your probate estate. And in some states, if you have a small estate, you can go through probate with an affidavit, saving a lot of time and money.
Establish Beneficiary Designations
If you have beneficiary designations on all your bank and retirement accounts, these assets transfer outside of probate. You should contact the company through which you set up your accounts to make your accounts payable on death to your intended beneficiaries. Your transfer on death accounts and policies may include the following:
- Bank accounts or brokerage accounts
- IRAs, 401(k)s, pensions, or other retirement accounts
- Proceeds from life insurance policies or annuities
Assets without named beneficiaries will go into your probate estate. It is a good idea to review your designated beneficiaries and also include a backup beneficiary if your primary beneficiary dies before you.
Utilize Transfer on Death Deeds
Many states allow you to complete and record a transfer on death deed which will transfer your real estate, also referred to as real property, to the named recipient on your death.
Create Joint Ownership of Real Estate
Another way to prevent your real estate from being probated is to make another person a joint owner of property. If you title the other person’s interest as a joint tenancy with a right of survivorship, the property will transfer to the surviving owner at your death.
Place Property in a Living Trust
You can place property in a living trust to avoid probate. You could be the initial trustee during your lifetime to handle the trust and nominate a successor trustee to manage the trust for your beneficiaries after you die. If you want to learn more about setting up a revocable living trust, contact an estate planning attorney for legal advice.
How a Will Helps with Probate
Preparing a last will and testament can exponentially speed up the probate process and decrease probate costs. Taking the time to prepare a will is a tremendous kindness to your surviving loved ones. Essential provisions to put in your will include the following:
- Name a personal representative
- Identify your personal property and beneficiaries
- Waive any requirement for your personal representative to post bond
- Include a self-proving affidavit
Establish a Personal Representatives and Beneficiaries
When you prepare a will, you give the court the information they need to distribute your estate. You name a personal representative, so the court doesn’t need to find one. You designate your beneficiaries, so the court doesn’t have to locate your legal heirs. Naturally, this saves time and diminishes fees associated with probating an estate.
Include a Bond Waiver
In your will, you can waive the requirement that your personal representative obtain a probate bond. The waiver speeds up the probate process allowing the court to skip the legal process of establishing a probate bond. It also makes it easier for your personal representative to start administering your estate.
Include a Self-Proving Affidavit
One way to accelerate the probate process is to include a “self-proving” affidavit in your will. A self-proving affidavit is a statement that a will is authentic. Your witnesses sign this statement before a notary. If your will contains a self-proving affidavit, the witnesses to your will’s signature will not need to testify to your will’s authenticity in court.
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Making a will is a simple step to speed up the probate process. You can do it yourself with online legal services that customize a will for your needs.
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