Understanding Probate: And How to Avoid It
Here is some more information about probate: Understanding Probate
What is Probate?
Probate is the legal process of petitioning the court to declare that a will is valid and appointing an executor to oversee the estate. The executor is the person chosen to carry out the wishes of the decedent. And the will provides instructions for what’s to be done.
Probate assets are typically assets titled in the decedent’s name alone. Common examples include:
- Personal property such as furnishings, jewelry and collections.
- Bank accounts or deeds to real estate, in the decedent’s name alone.
- An interest in a business.
- A life insurance policy, IRA, or investment account with no named beneficiary.
- An account which names the estate as a beneficiary.
Assets that pass to the next rightful owner by operation of law – and not per instructions in a will – are called “non-probate” assets. These include things like bank accounts, IRAs, life insurance and other financial accounts with a designated beneficiary. It also includes property held in joint names – like bank accounts or real estate.
If you don’t designate beneficiaries for your life insurance, financial accounts or IRAs, the assets are left to your estate and go through probate. It’s essential to properly complete forms connected with these accounts.
What Does Probate Entail?
Probate usually begins with the filing of a court petition by the person named as the executor, requesting: (1) appointment as the executor and (2) declaration that the will is validly executed. A document referred to as “letters” is issued which legally appoints the executor to act on behalf of the estate.
As part of the probate process, the will becomes a public document. Those who are beneficiaries under the will, and those who would have inherited had there been no will, must be given “notice of probate.” They are required to sign-off and consent to the probate process. If they do not, a hearing may be held. If heirs are unhappy, or believe there was fraud or a problem with the will, litigation will follow.
While state probate fees in New York are not high, lawyers are involved each step of the way. The paperwork and red tape can take months to complete, even if there are no problems. This becomes even more expensive. Avoiding probate saves money!
With estate planning, one thing is quite clear: you can put plans in place up until the day you die, and only then does it become too late. Make sure that your assets are titled in a way that can save you and your beneficiaries unnecessary probate costs.Tags: Estate Planning, Financial Planning, Probate, Retirement, Taxes