After the death of a family member, we have to deal with their testament. One of the essential steps that need to be taken then is probate. This judicial process is aimed at checking if a will is approved as a valid public document, constituting the true last testament of the person who passed away. When there is no legal will, it needs to be established whether the estate is settled in accordance with the laws of intestacy when it comes to residence or true property.
If probate is granted, it is the first step to start administrating the estate of the deceased, so you can begin distributing the property under a will and solving all the issues. You may have many questions concerning the length of probate, its cost, and many other significant matters. To make some of those concerns clearer, we have prepared a list of top five facts to know about probate.
1. Changing the assets’ title
During probate, the title on assets belonging to the dead person needs to be changed. This person’s investment accounts, real estate, bank accounts or other assets in their name are unavailable to anyone till the moment when a Personal Representative (formerly called an executor) is appointed by the court. When it happens, this person is entitled to go to all the financial institutions (such as a bank), having the court appointment in hand, to alternate the deceased person’s name on the assets to the name of the estate. After that, the Personal Representative starts to represent the estate and gains access to the account so as you cover the bills, make distributions, sell investments, and not only.
2. Probate of an alive person
An incapacitated person is not able to sign an income tax return, pay their bills, talk on the phone or make serious decisions associated with their health, for instance. Therefore, they need to have someone who will do those important things on their behalf. If there is no durable Power of Attorney or Health Care Proxy, then a relative, a friend, etc. should petition the probate court to make them this person’s conservator and/or guardian. The primary tasks of a conservator include filing tax returns, applying for medical benefits, covering the bills, and more. A guardian, on the other hand, is responsible for making decisions associated with the incapacitated person. They include serious choices concerning residency or health care decisions. The court is overseeing a guardian’s and conservator’s work, and in many cases, it must approve their decisions first.
3. The length and cost of probate
The court can process even the most basic and usual probate filing for a few months. Until this procedure is finished, nobody is entitled to the probate assets. It can include such expenses as the funeral bill, the mortgage payment, or real estate taxes that cannot be covered for a long time. Probate can be expensive as well, so it is beneficial to cooperate with a professional, experienced advisor who will help you with court filing and legal fees, as well as with many other procedures to make them as little costly and lengthy as possible.
4. Assets that do not require probate
You should keep in mind that not every asset requires probate. If a married couple has a joint account, and one of the spouses dies, the other spouse is wholly and automatically entitled to have it on their own without probate. Also, when the deceased husband or wife left a 401K plan, life insurance policy, IRA, or annuity where the other spouse is mentioned as the beneficiary, they do not have to visit the probate court to access those assets. The recipient can just contact the life insurance firm or the financial institution directly and do all the essential paperwork to get access to the asset or life insurance policy. However, if the spouse’s name is not assigned to the bank account, or if the mentioned beneficiary is not alive, assets will require probate.
5. Probate can be avoided with little planning
The good news is that probate can be avoided quite easily, provided you do some planning. It is undoubtedly an excellent idea to create and fund a Revocable Living Trust, being a part of the estate plan. In this way, all the assets can be passed to your chosen beneficiaries without probate. Having a Revocable Living Trust, you can have complete control over your assets when you are alive. When you die, the assets mentioned in the Trust can be immediately accessed by an appropriate person with no need for probate. What is more, a Trust (or a durable Power of Attorney and a Health Care Proxy) can also cancel the need to choose a guardian or a conservator if you become an incapacitated person at a certain point in life. Moreover, make sure that you have your contingent beneficiaries entitled to your life insurance policies and retirement accounts.
All in all, probate can take quite a long time and cost some money, but if you take care of all the necessary steps in advance, your beneficiaries can be released from this obligation. It is definitely worth your time to take care of that as soon as possible!