What Is Probate?
Probate is a legal process that estate executors or personal representatives must follow to ensure that all debts and taxes of the deceased person are paid and the probated estate is distributed according to local probate law.
If someone dies without a will, state intestacy laws determine who gets whatever assets might be probated. An attorney can help probate an estate in court in accordance with probate laws in the state where the person was living at the time of death.
How Does Probate Work?
The probated assets are transferred to beneficiaries according to instructions set out by the deceased person before death.
The process involves identifying all of the probatable assets, notifying creditors of the probate, paying debts and taxes out of probated assets, identifying heirs and beneficiaries, deciding on a final accounting to present to the probate court judge, petitioning for probate if necessary, obtaining probate from local probate courts or probating an estate in another state.
Steps Involved in Probate
Here are the steps involved in probate:
1. Gather assets.
In this step, probators search for probatable assets (assets that can be probated). Assets like cars, checking accounts and real estate are probate assets.
2. Notify creditors of probate proceedings.
Creditors of the deceased person must be notified of the probating of the estate, which will affect how much they receive from their claims.
3. Identify probate assets and their values.
In this step, probators need to determine how much probatable assets are worth.
For example, probators might have to estimate how much a car is worth or whether the real estate can be sold for more than the mortgage on the property. In some cases, probated assets will not have values because probators cannot find them, and probators must list those as probate assets with no value.
4. Pay debts and taxes out of probated assets.
If there are probate assets available to pay creditors, probators will do so by selling some probated assets or using cash from other probated assets to pay off creditors.
Any probate assets not used to pay creditors will be distributed according to the probate laws in the probated state.
5. Identify heirs and beneficiaries.
Estates with probated assets are required to provide a list of all interested (living) parties in the estate, which includes all people who would inherit money or property if the probate process were completed.
The probators do this by filing a probate court petition, also called a probate proceeding, where all interested parties are notified of the probated assets and their rights to claim them from the estate.
6. Decide on a final accounting for the probate court judge.
In some cases, beneficiaries need to decide on a final accounting for probate court. This is an important step because the final accounting includes decisions about probated assets.
7. Petition probate if necessary.
In some cases, probate courts do not automatically give probators permission to distribute probated assets based on how much money is in the probated accounts. In those cases, probators must petition the court for probate.
8. Obtain probate from local probate courts or probate an estate in another state.
If the deceased person was not a resident of the state where he died, it might be necessary to probate his estate in another state.
Probate courts allow probators to probate an estate by sending a probate court petition and other probate documents to them for review.
How Long Does It Take?
It takes an average of nine months to a year to probate an estate but can take longer depending on the size of the probated assets and the complexity of the probate.
Who Pays for the Costs of Probate?
The probate process can be expensive, and probating an estate comes with several costs.
Estate executors are responsible for paying probate fees out of probated assets or by obtaining funds from other probated assets. If there’s not enough money to pay the expenses, heirs might contribute.
When to Use the Probate Process
The probate process is used to probate a deceased person’s probated assets and distribute them to beneficiaries or heirs.
The probate process is also the only way an estate can be probated if there isn’t a will left behind by the deceased person. If there is a valid will, probators must probate the estate using the intestate probate process instead.
How to Avoid Probate If Possible
Many probated assets are probate property, meaning they are probated without exception.
However, probators can avoid probating certain probated assets by transferring them into joint tenancy or another co-ownership arrangement that keeps the property out of probate.
Beneficiaries can also transfer probated assets to one another to avoid probate in some states.
What Are Some Alternatives to Probate?
Probate isn’t always necessary for making financial distributions after someone dies. Life insurance payouts, 401(k) plans, annuities, or some bank accounts are examples of probatable assets that heirs can receive without probating an estate.
An attorney may be able to probate an estate in court if there’s a will or the state intestacy laws apply.
The Bottom Line
Most probated assets are probate property, meaning probators must probate these assets before distributing them to beneficiaries or heirs after a person dies.
This process can take nine months to a year depending on the size of the probated assets and how many people are inheriting money or property from the estate.
Probating an estate can be costly, and probators must pay probate fees from probated assets or get funds from other probated assets if there’s not enough money to cover the expenses.
If beneficiaries want probated assets they own transferred out of probate, they should consult an attorney to see what can legally be done in their state.
Disclaimer: The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
About the Author
True Tamplin, BSc, CEPF®
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.