Probate 101: What You Should Know About Probate (or Avoiding Probate)

When you’re grieving, a complicated legal and financial process is the last thing you want to deal with. But often, that’s exactly what happens when families go through the probate process after losing a loved one.

Understanding the probate process can help keep you from getting caught by surprise.

What happens if someone dies without a will? Is there any way to avoid a lengthy probate process and pile of legal paperwork?

We’ll break it down for you.

What Is Probate?

Probate is the legal process of administering a person’s estate after their death. If you have a last will and testament, probate will involve proving that your will is legally valid, executing your instructions and paying applicable taxes.

Having a clearly written will is one way to make the probate process easier on your loved ones. After all, your will doesn’t only specify who should inherit what. It also designates who you’d like to take care of your kids if both parents were to pass away, plus the executor who should fulfill the instructions in your will.

If you die without a will, the probate court will rely on your state’s intestate law to figure out how to distribute the person’s stuff.

Terms to Know

Legal proceedings often involve terminology that can be overwhelming when you’re already dealing with a lot. A few useful probate terms to know:

• Decedent: The deceased person whose estate is going through probate.

• Executor or personal representative: The person in charge of carrying out the instructions in the will.

• Administrator: A court-appointed executor, if someone dies without leaving a will.

• Intestate: A case where someone dies without a will.

• Intestacy: State laws determining how to distribute such estates.

• Letters testamentary: A document from a probate court authorizing the executor to start carrying out the will.

• Notice of probate and notice to creditors: Notices that the executor has to submit, in writing, to the heirs (“interested parties”) and creditors.

• Small estate affidavit, summary probate and/or summary administration: Documents or processes that can allow you to skip or shorten certain aspects of probate (i.e. distribute property without a lengthy court process). Estates below a certain value (depending on your state) are eligible for this.

Step-by-Step Guide to Navigating Probate Court

Your probate experience will be determined by your own state laws, but here’s how the process generally goes.

Step 1: Open probate

An executor can’t jump right in and start passing along family heirlooms and inheritances. The first step is filing a petition with the probate court to open the process and “prove” the will. Until that happens, they’re not allowed to distribute or discard any property. (Executors are often permitted to take necessary steps to protect the property, like clearing leaves out of the roof gutters to prevent water damage or fixing leaks—but check with an attorney to make sure.)

The probate court’s role in this step is to verify that the will is legally valid. If a will isn’t properly executed, or there are multiple wills submitted at the same time, the court may need to get involved to determine next steps. Issues with witness signatures or potential accusations of undue influence could also slow the process of proving the will.

Generally speaking, the court is looking to establish that the person writing the will had a reasonable sense of their assets, and a reasonable sense of who to leave them to. Pass that two-part test, and you’re likely in the clear, legally.

Step 2: Send notices

If everything proceeds as usual, the probate court would approve the will and officially appoint the executor or administrator. Then the executor should notify interested parties and creditors.

“Interested parties” means people named in the will, as well as close relatives that intestacy laws would identify as “next of kin.” For example, let’s say a man with two grown children passes away, and his will leaves his entire estate to his best fishing buddies. His children will likely still receive a notice, too. States may keep their own lists of which close relatives to contact.

It’s the executor or administrator’s job to send notices (or post notice in a local newspaper if addresses can’t readily be found). The list of people who need to receive notice include:

• Beneficiaries named in the will

• Relative(s) who would stand to inherit the estate if there were no will (look up your state’s intestate succession laws)

• Any creditors that the executor becomes aware of when going through the decedent’s financial documents

If a will is uncontested—that is, everyone basically agrees that the will is valid and no one is interested in challenging it—the probate court doesn’t have much to do besides review and sign paperwork.

If someone has another version of the will that they feel should be honored instead, or argues that the will has problems that make it legally invalid, the judge will be much more involved. The more that beneficiaries and potential heirs disagree about how to handle the estate, the more likely it is that the probate judge will need to weigh in.

In the hypothetical case of the man who left his estate to friends, it would be challenging for his kids to contradict the wishes he laid out in the will. This hypothetical guy’s kids would need to prove that someone exerted “undue influence” on their father or that he lacked sufficient mental capacity. Both those routes are difficult.

Creditors have a limited amount of time to submit a claim for outstanding debts (six months in some states, a year or longer in other). When it comes to debts, the court generally steps in for two main reasons. First, if the executor wants to deny the validity of a creditor’s claim, a judge will decide who’s right. Second, if outstanding debts are high enough that the executor would have to sell some assets (like a house) to pay creditors, beneficiaries can also bring that decision before a judge if they disagree on the best course of action.

Side note: If the court is looking at the estate of someone who died without a will at all, intestacy laws will determine which relatives are next in line.

Step 3: Take inventory

The executor or personal representative’s job includes assessing the total value of the estate. This means determining the value of all assets on the date of death. This can range from fairly straightforward (like just checking the bank account balance on the date of death) to visiting a professional appraiser to evaluate jewelry, or consulting a broker to determine the value of stocks and bonds on that particular date. Taking inventory is important to prove to the probate court and the heirs that the estate has been distributed properly. The executor sends copies of the inventory to the probate judge and heirs.

If you qualify for small estate probate, you might get to sidestep an exhaustive inventory.

Step 4: Distribute assets

Going through someone’s estate and carrying out the will’s instructions can feel quite slow at times. And dealing with large assets, like selling a house, can take months.

Leaving money to minors, for example, is a mistake that can drag the probate process out significantly. Minors can’t legally inherit directly, so the money may be put into a trust for a court- appointed trustee to manage, or a guardian may be appointed.

Administering an estate also includes paying debts and taxes, and submitting policy claims (such as filing with medical insurance or helping a beneficiary with a life insurance claim). It can also include making sure retirement and other accounts get closed. Plus, an executor might need to sell assets and making sure all possessions go where they should—whether that’s to a beneficiary or to the local dump.

It’s a huge task, which is why executors are entitled to compensation for their work (state law or the will typically determines what that compensation will be).

The court’s role here is to rule if and when major disagreements arise. Beneficiaries might challenge how the executor is fulfilling her duties. In that case, for example, the court can authorize a sale of property. Or, if the will says one thing about executor fees and state law says another, a probate judge may need to make the final call. (Wills generally win out in that case, even if the will’s instruction is that the executor won’t get a fee.)

Step 5. Close the estate

After all the assets have been distributed, sold or discarded—and the court and executor’s fees have been paid—the last step is filing a petition to dissolve the estate and conclude the probate process.

Note that probate is a matter of public record, so someone trawling through legal records can view details of the process.

What’s the Deal With a ‘Small Estate Affidavit’?

Probate has a reputation for being a lengthy, expensive and complicated process. That’s why some people attempt to skip it entirely. Is that the right choice for you?

Almost every state offers a “small estate probate” option that simplifies or eliminates the need to involve probate court. When you’re searching the internet for your own state’s laws, you might also try searching around terms like unsupervised, modified or streamlined.

The cap for a small estate affidavit varies widely. California law lets you skip the court process if the total value of probate-eligible assets (property and financial accounts) comes to less than $184,500. Estates that qualify may get to skip steps like a full inventory and proceed through the probate process with minimal supervision from the court system.

Note that you might still be eligible for “small estate” probate even if the total value of your assets is way over the limit. That’s because you can subtract assets that wouldn’t go through probate. For example:

• Property owned jointly, like a joint checking account or a house with both spouses on the deed, goes to the surviving owner automatically.

• Accounts with an eligible beneficiary listed, like a retirement account or life insurance policy, also go directly to the beneficiary.

• If you’ve set up payable on death (POD) beneficiaries for your financial accounts, these will stay out of the probate process.

• Likewise, if you have set up a revocable trust, those assets wouldn’t be counted toward probate.

Let’s say you have a $200,000 retirement account with a beneficiary and $75,000 worth of assorted accounts and possessions.

In the eyes of the probate court, only that last $75,000 would count toward your total probate assets. As a result, you still might have a “small” estate, legally speaking.

Avoiding Probate (Is That Smart?)

The benefits of avoiding probate are:

• It’s often simpler and faster for account beneficiaries to claim the funds.

• You’ll avoid probate court fees and executor’s fees (which can be significant).

• You can keep matters private instead of appearing in public records, as you would with

  probate.

Some benefits of relying on your will to dictate how your assets should be distributed, and thereby going through the probate process, are:

• Wills can make your intent clearer. State’s intestacy lawbooks can be full of complex legal permutations (like per stirpes stipulations or anti-lapse statutes) that are tough for many non-legal folks to keep track of easily. A will is set up to allow you to communicate your wishes and back-up plans more clearly.

• Wills let you leave money to organizations, like a favorite charity or college. Some probate-exempt accounts only allow human beneficiaries.

• Creditors may have a shorter time window to claim debts with a will than in certain other cases.

Your financial and family situation will determine whether probate is worthwhile for you, or if keeping as many assets outside of probate as possible is best. This applies to assets beyond those covered in your will, too. For example, unclaimed life insurance benefits can add up to billions of dollars, so it's important not just to get your ducks in a row but also to make sure your loved ones know what to expect.

Either way, thinking ahead and preparing your will and accounts the way you want now will reduce stress and avoidable arguments in the future. If you have any questions about what makes the most sense for your situation, reach out to an estate attorney or other qualified professional to discuss your options.

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