Wills should be probated when the person dies. Wills do not have to go through probate unless you want to transfer ownership of assets owned by the testator, or the person who wrote the will to her living beneficiaries. Many states provide legal options for doing this through simplified procedures for limited estates. Generally, probate is required for large, complex estates with multiple assets to settle the testator’s affairs in an orderly, legal way. However, there are ways to avoid probate even in this instance. When there is no urgency to transferring title of assets left by the testator, or the person who wrote the will, some families do not bother to go through the process. There is no penalty for this. For instance, in Utah, if the family continues to make tax payments on property owned by the testator and does not attempt to sell it, in most cases the asset can remain in the testator’s name indefinitely.
However, check with an attorney in the state where the testator died to be sure this holds true there because state laws vary. Even large estates can by-pass the probate process through the use of revocable living trusts. A testator transfers assets to the trust during his lifetime and is generally the trustee, retaining control over his assets, but technically the trust owns them. Therefore, when the trustee dies, there is no need for probate because the owner of the assets, the trust remains alive. However, this is only a viable option when all assets are transferred to the trust. Probate would still be required to transfer ownership of any that are overlooked or omitted.
Many states offer simplified versions of the probate process for small estates. Although technically these procedures are still “probate,” they by-pass many formalities that incur court costs and expenses for the estate and that can take up a lot of time. The criteria for simplified probate in most states are the value of the estate, usually minus the value of any real estate. Some wills include assets that are not subject to probate. These include life insurance policies and retirement accounts with named beneficiaries that pass directly to that beneficiary at death, so probate is not necessary to transfer the asset. Real estate often does not require probate, either. For instance, most deeds that are held jointly between two people contain provisions for the deceased’s share to pass automatically to the survivor. However, the property would still require probate eventually when the second owner passes away.
Probate sounds like a complex and expensive process. However, probate is actually a very common legal procedure and is the way that some assets must be formally passed from the person who is deceased to his or her heirs or beneficiaries. Whether probate is needed depends on the type of property, how it is owned, and what the state laws are. For very large estates the probate process can be a complex procedure, but for most people, it is a very simple formality. Probate is really just a judge giving legal permission for assets to be passed on, whether or not there is a last will. Most people think of probate as involving a will.
If a person dies and leaves a will, then probate is required to implement the provisions of that will. However, a probate process also can happen if a person dies without a will and has property that needs to be distributed under the state intestacy law (the law of inheritance). If the decedent owned an account that named a beneficiary (such as a retirement account) but the beneficiary has passed away before the owner of the account, probate law requires that account to go through the court so that the funds can be passed to the person legally entitled to them under state law. If the decedent formed a revocable living trust and funded his assets into the trust, they would not require probate because living trusts avoid probate. They allow a mechanism by which assets can pass to beneficiaries under the terms of the trust agreement so probate is not required. But many people who form trusts also create something called a “pour-over” will. This type of will is designed to catch any assets the trust maker neglects to place into his trust for one reason or another. It then transfers them to the trust at the time of the trust maker’s death, and this type of will would require probate even when a trust exists.
Common Assets That Go Through Probate
Basically, probate is necessary only for property that was:
• owned solely in the name of the deceased person for example, real estate or a car titled in that person’s name alone, or
• a share of property owned as “tenants in common” for example, the deceased person’s interest in a warehouse owned with his brother as an investment.
This property is commonly called the probate estate. If there are assets that require probate court proceedings, it’s the responsibility of the executor named in the will to open a case in probate court and shepherd it to its conclusion. If there’s no will, or the will doesn’t name an executor, the probate court will appoint someone to serve. Either way, the person in charge can hire a lawyer to help with the court proceeding, and pay the lawyer’s fee from money in the estate.
Assets That Don’t Need to Go Through Probate
Typically, many of the assets in an estate don’t need to go through probate. If the deceased person was married and owned most everything jointly, or did some planning to avoid probate, a probate court proceeding may not be necessary.
Here are kinds of assets that don’t need to go through probate:
• Retirement accounts—IRAs or 401(k)s, for example for which a beneficiary was named
• Life insurance proceeds (unless the estate is named as beneficiary, which is rare)
• Funds in a payable-on-death (POD) bank account
• Securities registered in transfer-on-death (TOD) form
• savings bonds registered in payable-on-death form
• Co-owned savings bonds
• Real estate subject to a valid transfer-on-death deed (allowed only in some states)
• Pension plan distributions
• Wages, salary, or commissions (up to a certain amount) due the deceased person
• Property held in joint tenancy with right of survivorship
• Property owned as tenants by the entirety with a spouse (not all states have this form of ownership)
• Property held in community property with right of survivorship (allowed only in some community property states)
• Cars or boats registered in transfer-on-death form (allowed only in some states)
• Vehicles that go to immediate family members under state law
• Household goods and other items that go to immediate family members under state law
Whether Probate is required or not depends entirely on
• The way in which assets were held, which will either be in joint names, or in the deceased person’s sole name; and
• The value of these assets.
Assets that are owned jointly can be held one of two ways: as joint tenants or tenants in common. Assets held as tenants in common will not pass by survivorship but will pass to whoever is legally able to inherit under the deceased’s Will or intestacy. If any assets are held in joint names as Joint Tenants with someone who is still alive, the asset will automatically pass to the co-owner under the Right of Survivorship. If this applies to all the deceased’s assets, Probate will not be required. But if any assets are held in the deceased person’s sole name, you need to find out how much that particular asset is worth. If it’s over the Probate threshold (explained below) then Probate will be needed in order to access and/or transfer it.
The Value of the Assets
Even if the deceased person owned an asset in their sole name, Probate may not be needed if it is worth very little. That’s because most banks and financial institutions will release funds if the deceased held or owned less than $5,000. However, each bank has its own minimum Probate threshold and it’s worth checking the position with them. Where the deceased held assets in their sole name but they are of little value, it’s called having a small Estate. It’s hard to put an exact figure on what constitutes a small Estate, as every bank and financial institution has their own limit. But generally if the total value of the Estate is less than $15,000 then usually Probate will not be required. But if the deceased owned assets worth more than the threshold, you’ll need to go through the Probate process. So if the person who died owned a property in his/her sole name, you can be certain that Probate will be needed. It doesn’t matter if there’s a legally valid Will. This has no impact on whether or not Probate is required.
Probate is not exclusively for Estates where the person died Intestate (meaning without a Will). Instead, Probate is required for all Estates where assets are above a certain value, and are not being automatically transferred to a surviving joint owner. However, you do need find out if there’s a Will, as this will influence certain things. For example, if there’s a Will it will name Executors. These people must apply for a Grant of Probate, if necessary. The Estate will eventually be distributed to the beneficiaries named in the Will. If there isn’t a Will, the will determine who the beneficiaries are. If Probate is needed, one of these people must apply for a Grant of Letters of Administration, rather than a Grant of Probate.
When a person dies with a will, they typically name a person to serve as their executor. The executor is responsible for making sure that the deceased’s debts are paid and that any remaining money or property is distributed according to their wishes. It’s not uncommon for wills to be written years before a person die. Once death occurs, the executor should file the will in court to begin the probate process.
Failing to file a will within the time required by the state can have serious consequences. Although failure to file by itself is not a criminal violation, in most states this subjects the person to a lawsuit by someone who was financially hurt by the failure to file. For example, in Utah, the law says that anyone who “willfully failed to file a will with the court” is liable to any injured party for the damages resulting from the violation. Criminal liability could occur if the failure to file a will is coupled with intent to conceal the existence of the will for financial gain. For example, your father decided to leave his entire estate to a favorite charity and left you nothing. You decide not to file his will. The laws of intestate succession allow you to inherit your father’s entire estate. In this instance, a failure to file the will would likely expose you to criminal liability.
When people die, its common to have unpaid bills. Opening probate cuts short the amount of time a creditor has to claim against the estate. A creditor must file their claim within four months from the date an executor or personal representative is officially appointed. A creditor’s claim may be rejected by the executor if it is filed late. When probate is not opened, a creditor has one year to file suit against the estate. It is common for a will not to get filed when the deceased’s estate is insolvent, meaning there are more bills that money. In general, relatives and friends have no legal obligation to do anything to pay the debts, to communicate with creditors, or open a probate. So, the simplest solution is to file the will and walk away from the problem by not opening probate.
Before you can submit the will to Probate, you’ve got some work to do.
The first thing you must do is look over the Will and determine who the beneficiaries are, what assets the deceased owned (and the value of those assets), and what debts the deceased owed. You will also need to establish a bank account in the name of the estate to handle any money that continues to come into the estate (income, earnings, or savings) or any bills or dues that the estate will be paying. Many people keep their Will in file cabinets, safe deposit boxes, offices, or with an attorney. You need the official document to begin the Probate process. Put together a list of all the people named as beneficiaries. This list should be as complete as possible and include the following information about each beneficiary:
• Phone number
• Email address
• Date of birth
• Social Security Number
If you know that someone named as a beneficiary is dead, you should obtain a certified copy of that person’s death certificate.
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