Understanding Probate: Commonly Asked Questions
Probate?can be complicated and confusing procedure. Some families?are involved in a?probate a handful of times during their lifetime. When a family member passes away, the surviving family members are often starting at square one - they often have no idea what probate is or what is involved in completing it.
Many years ago it was determined that when someone dies with an asset in their name, the asset becomes "frozen" and it is up to the applicable court system to oversee the management of the asset and the ultimate disposition of the asset to the heirs. Is having the court system oversee the distribution of assets after every person's death the most efficient way to provide for an efficient estate settlement while maintaining positive relationships of surviving family members? Probably not.
I've been asked thousands of questions about?probate over the years. The following are four questions that we get regularly - with answers.
What is Probate?
When someone?in America?dies, their assets are frozen and the family must go through a court process to access the assets. This court process is called a "probate." Generally, the surviving heirs must hire an attorney. The attorney will gather information about the family and the assets owned by the deceased. Various court pleadings are prepared and filed by the attorney at the courthouse. At the conclusion, a judge will sign a court order ordering that assets be transferred to the appropriate heirs. Each state has very particular rules on the timing and information that must be submitted in these court pleadings for judicial review.
How Long Does Probate Take?
This question is common because, customarily,? the deceased's assets are frozen until the?probate is complete and the appropriate judge signs the necessary court orders and assets have been transferred to heirs in compliance with the court orders. Every?probate requires that court documents?be submitted by heirs, detailed lists of assets and debts be prepared by the law firm and filed at the courthouse, executors or administrators be confirmed or appointed, and other procedural rules must be followed to the letter. Some?probates are completed in a matter of months. When there's complications, it can take years. Factors that can affect the length of time that a probate takes include:
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How Much Does It Cost to Complete a Probate?
Tough question. All probates are different. Some states have a vague "reasonableness" standard for legal expenses,?but every?probate encompasses court filing fees and law firm charges that are customarily in the thousands or tens of thousands of dollars. Some states have fixed costs. For example, the California Probate Code has a complicated formula for determining California probate costs, based in large part on the value of the estate. In California, a $1 million estate will incur fixed probate costs of $46,000.
How Can We Avoid Probate?
Some assets that you own (IRAs, for example) avoid probate by their nature because you can designate a beneficiary or beneficiaries to receive your IRA when you die on the financial institution's beneficiary designation form. Designating beneficiaries on accounts like life insurance, retirement accounts, and payable-on-death (POD) bank accounts can also help avoid probate. Other assets (your home, for example) typically go through probate if the home is in your name when you die and you want to leave it to your children or grandchildren. You can transfer your "probate assets" to a revocable trust before you die so that your designated "trustee" can quickly transfer the assets from your trust to your heirs after you pass away without the court and attorney-involved probate governing the sale or transfer of your home after you pass away.
Understanding probate is crucial for effective estate planning and ensuring that a deceased person's wishes are honored. While probate can be a lengthy and costly process, proper planning can help simplify or even avoid it altogether.