Probate is the legal process that your estate must go through after you pass. The court will begin the process of dispersing your estate to your heirs during this legal proceeding.
If you have a Will and/or Living Trust that clearly states your wishes, probate will be much easier. These documents are particularly useful because they name your Beneficiaries and Executor. An Executor is the person in responsibility of carrying out your last wishes.
It's crucial to remember that your Will still has to go through probate, but it'll be a lot easier if you plan early. During probate, a court will first verify your Will, after which it will authorize your Executor to settle any obligations and taxes, as well as divide your remaining property according to your wishes.
What is Probate?
Probate is a court-supervised process that authenticates your Will (if you have one) and authorizes your named Executor to distribute your assets and property. During the probate process, all of your assets must be identified and valued. After that, taxes and obligations are paid, and the estate's residual worth is dispersed.
This process is more complicated when there is no Will (meaning your estate is intestate). Due to the lack of documents indicating your final desires, the courts must handle the proceedings and make all decisions on your behalf.
When is Probate Required?
Your estate will go through probate unless you properly plan ahead of time. However, if you have a sound Estate Plan in place, the process is substantially simplified, if not entirely avoided. The more you organize ahead of time, the easier it will be on your loved ones after you pass away.
Creating a Trust is one option to decrease the difficulties and time requirements of probate, or even to avoid it entirely. Any assets you put into your Trust will avoid going through probate.
Probate is best understood as a court-monitored process that disburses the right assets to the right Beneficiaries. When there is no Will or Trust, the court is responsible for appointing someone to represent your estate. If a Will is established, the Personal Representative will do everything that an Executor would. Some assets and property in an estate will always go through probate, while others will not (such as those in a Trust).
What Assets Do Not Need to Go Through Probate?
If you do not have a will, your assets will go through probate. Additionally, everything passed down through a will has to go through probate. With proper planning, certain assets and properties can bypass the probate process. Probate can be avoided by using the proper tools. The following are some example of estate planning methods that can avoid probate:
- Assets placed in a Revocable Living Trust. Because a Trust owns the items it contains, when you die, anything in your Trust can be distributed to your Beneficiaries according to the Trust's instructions, bypassing the probate procedure.
- Assets with a Named Beneficiary. You can avoid probate by naming a Beneficiary on an asset. Life insurance policies, for example, have specified Beneficiaries, so proceeds go directly to them instead of going through probate.
- Assets Titled as POD (Payable on Death) or TOD (Transfer on Death). When you title property and assets with "POD" or "TOD," you can avoid probate and pay or transfer items directly to your designated Beneficiary. Some states do not allow this type of titling for real estate.
- Property with a joint title (including Survivor's Rights). When you pass away, property named jointly with Survivor's Rights will automatically pass to a Survivor. The property does not need to go through probate in this scenario.
How to Avoid Probate
There are strategies to reduce the stress that probate might bring to family members. Avoiding probate has various advantages, including time, expense, and privacy.
Probate might take a lengthy time without the presence of a Will (sometimes years). While the cost of probate varies by state, it typically includes executor fees, administrative costs, and legal fees. The longer probate takes, the higher the fees. Finally, one of the most common reasons people seek to avoid probate is for reasons of privacy. Probate proceedings are open to the public, but establishing a Trust keeps asset distribution secret.
You may reduce the stress and burden of probate for your friends and family in a number of ways, including:
- Create a Revocable Living Trust. As previously stated, when you create and fund a Trust, you are effectively transferring ownership of your assets to the Trust. When you die, the named Trustee handles all of the assets inside it according to your instructions.
- While you're still living, leave valuables to loved ones. Reducing the value of an estate can make the probate procedure more easier, as well as provide tax benefits in terms of federal and estate taxes.
- Keep your estate to a minimum. The majority of states offer an exemption level that, at the very least, allows for a faster probate process in the case of tiny estates. You should check the maximum amount your state allows (don't be startled if it's considerably greater than you expect — limitations in some places might be rather high).
- Titled Certain Accounts as POD or TOD. This is applicable to bank accounts and other assets. It is also a viable manner to transfer real estate to Beneficiaries in some (but not all) states.
Property can be titled jointly. Jointly owned property allows assets to be transferred from one person to another without the need for probate.
How Long Does Probate Take to Complete?
Probate can take quite a bit of time. In a perfect world, an uncomplicated estate can be completed in 6 months to one year if everything goes smoothly and no one raises any objections.
The process can take several years in complicated or contentious situations. It could take decades to settle an estate in the most extreme situations. While many things influence the actual timing for probate – such as the presence or absence of a Will, the amount of an estate, unhappy Beneficiaries, or intricate estates - correctly and effectively Estate Planning is one of the greatest methods to assure a quick and smooth probate.
What Is the Cost of Probate?
The probate process comes with a number of charges. Probate fees are determined by factors such as whether you have a Will, the size of your estate, and where you live at the time of your death.
- Attorney fees. Depending on your state, you may be compelled by law to hire an attorney to manage your probate. His or her legal bills would be covered by the estate.
- Executor Compensation. The majority of states set a minimum remuneration guideline for Executors or Personal Representatives, such as 2% of the estate value. It's not a simple chore, therefore paying them for their time spent settling your estate makes sense.
- Probate Bond. Known also as a Fiduciary or Executor Bond, some states need a bond to safeguard Beneficiaries unless your Will expressly specifies otherwise. Bond businesses often charge a percentage of the bond's required amount.
- Court costs. Individual filing costs are charged by counties and states, thus the amounts will vary depending on where probate is filed.
- Creditor Notice Fees. To notify creditors and beneficiaries of a death, you must publish notifications in local newspapers and/or other modes of communication. There will be a fee involved with these announcements, which will be paid from the estate as well.
Milwaukee Probate Attorney
Do you or a family member require additional information on the probate process? Heritage Law Office can provide you with further information. We provide as much assistance as you need and have made the process as easy as possible. Call Heritage Law Office at 414-253-8500 or send us a message.