Probate: What It Is -- and How to Avoid It
Probate is the legal process that includes filing a deceased person's will with a court, locating and gathering the assets owned at death, paying all final debts and taxes due -- and, eventually, distributing the property that remains as the will directs. If someone dies without leaving a valid will and without setting up any of the other ways to pass property discussed below, the property will be distributed according to a formula set out in state law.
How probate works
- Taking the will to court: During probate, the will must be brought to a local court, where it will be examined to be sure it's authentic and properly signed and witnessed, and that it complies with all other state requirements.
- Who can receive property: If your relative dies without a will or with an invalid one, also known as "dying intestate," the court will determine who's entitled to take any property under state law. While state laws vary slightly, most specify that the property goes according to a hierarchy: first to a surviving spouse, then to any children, and finally to any surviving parent, siblings, nieces and nephews, and next of kin.
- Administering the estate: The probate court will order the executor, who is named in the will, to administer that will. If there is no will, the court will appoint an administrator. The executor or administrator will be charged with a number of tasks: inventorying the property your family member owned at death, having it appraised if necessary, notifying relatives and known creditors about the death, and publishing a notice in the local newspaper that's intended to ferret out unknown relatives and creditors.
After final debts and creditors are paid, the property will be passed to the survivors. The entire process generally takes 9 to 18 months -- although some probate procedures drag on for several years before the property is finally divvied up and distributed.
Advantages of probate
Despite the common laments about probate being a costly and confusing procedure that's long on paperwork and delays and short on satisfaction, in some situations it may actually be helpful. For example:
- Probate sets an absolute deadline by which creditors must file formal claims against an estate or be forever barred from collecting -- useful if your relative faced big debts or the possibility of a large court judgment.
- Probate makes the process of dividing up a person's assets transparent, since the public can generally get access to a will once it's filed in probate court. This can be handy when survivors feud over property to which they feel entitled -- a situation that crops up all too often. Facing a will's written directives can sometimes help calm the greedy or overanxious.
Disadvantages of probate
Time and money are the two big drawbacks to probate, and they're the common reasons that are given for making every effort to avoid it.
- It typically takes nearly a year or more from the first contact with a probate court until property is finally distributed to survivors.
- The entire procedure is often costly in itself -- usually involving fees for attorneys, appraisers, accountants, and the probate court. Of these, the biggest bite goes to probate lawyers, who can take a set percentage of the fair market value of the property just for completing and filing the required paperwork.
- All these costs are paid from estate property, and they generally eat up 5 percent or more of its total value. For example, if your relative owns $400,000 worth of property at death, probate fees alone are likely to run $20,000 or more.