What is Probate, and Why Do People Try To Avoid It?
Most people understand that probate happens after someone dies, and it involves distributing their money and property. But what is probate, actually, and why do people hope to avoid it? Probate is a process supervised by the courts. Its purpose is to prove the legitimacy of a person’s will, notify the heirs, and pay off any outstanding debts before distributing the estate.
Once the court determines a will is legal, it is used as a guide to carry out the decedent’s final wishes. In the absence of a will, the court will decide how assets are distributed based on the information available. For small estates, the probate process might only take a month or two. Larger estates can take much longer, particularly if someone contests the will. Contested wills could take years to get through probate and be executed. The process can be arduous, which is why people try to avoid it if possible.
Assets Not Included in Probate
The existence of a will does not avoid probate, but it does make the process easier. Fortunately, some assets aren’t included in the probate proceedings. For example, bank accounts, retirement funds, and life insurance policies typically have a beneficiary designated already, so these assets can be distributed immediately. Assets in a trust don’t have to go through probate either. In some states, probate is not required at all for estates valued under a certain amount.
An executor is a person whom the decedent has named to manage their final details. There are many specific steps the executor must take before distributing the estate:
- Obtain multiple original death certificates as proof of death
- Petition the court to be authorized as executor and given access to assets
- Identify and document assets to determine the value of the estate and whether probate is necessary
- Pay outstanding bills and other related expenses
- Pay income taxes
- Pay estate taxes if over the $11.7 million threshold
- Notify beneficiaries
- Distribute the assets according to the will
- Prepare and file final tax returns
In some states, the executor is required to post a death notice in the newspaper so that any creditors can make claims against the estate before it is distributed. An executor is entitled to reimbursement of any expenses incurred during the process and may earn a fee as a percentage of the estate.