What is Probate?
When a person passes away, everything from getting belongings to beneficiaries and paying debts, to re-titling assets to the name of the new owner must be handled. To the extent someone owns property in his own name, like a bank account or a home, the property must go through “probate,” to get into the hands of the next rightful owner. Whether you have a will or not, probate will be required if assets you own don’t pass by operation of law.
Many things we own go to our beneficiaries through operation of law. For example, if you name a beneficiary to receive life insurance or your IRA funds, those designation forms alone provide legal authority to get your assets to their rightful beneficiaries. If you own real estate in joint names with your spouse, your spouse inherits the property. In all these situations probate is not required to pass the property to beneficiary.
What Does Probate Entail?
Probate starts when a person who represents your estate petitions the court for permission to be in charge of winding up your affairs and distributing assets. As part of the process, takers under your will are informed and if you don’t have a will, those who inherit by law are notified.
Once a probate petition is filed, your will becomes a public document. Once your heirs or beneficiaries are notified, they learn:
- That they will or will not get something under your Will.
- That they can object to the appointment of the executor or administrator.
- That they can object to the validity of the Will.
Wrinkles may occur if there are minor beneficiaries or family members cannot be notified. Even if all goes well, it can take several months to get the court’s blessing for the executor or administrator to get started.
The executor or administrator gets down to the business of gathering your assets, making sure they are safe from theft or damage, paying your debts, paying any income or estate taxes you may owe, and then distributing the balance to your beneficiaries.Typically a final accounting is prepared to show what came in to the estate, and what was paid out and that all accounts are settled.
What Does Probate Cost?
If you read through the paragraphs above and imagine that an attorney is involved in every step, you have an idea of how expenses accumulate when it comes to probate. The fees for filing a probate petition in NY are based on the size of the estate and are not especially onerous in New York. For example, in New York the filing fees for 2015 are:
|Value of Estate|
|Less than $10,000||$45.00|
|$10,000 but under $20,000||$75.00|
|$20,000 but under $50,000||$215.00|
|$50,000 but under $100,000||$280.00|
|$100,000 but under $250,000||$420.00|
|$250,000 but under $500,000||$625.00|
|$500,000 and over||$1250.00|
The probate fee is not the expensive part. The cost of doing all the work can get expensive depending upon what the attorney charges and the size of your estate.
Why Avoid Probate?>
The main reasons people want to avoid probate are to: (1) keep their private affairs private, (2) avoid the cost and hassle of notifying family members and (3) avoid potential disputes about whether the will is valid or who got what.In many situations, the process can be straightforward and relatively simple. But if there are any glitches in your family tree, difficult relationships among family factions, minor beneficiaries and the like, well then avoiding probate may make sense.