If you have carefully prepared an estate plan, you are off to a great start. Creating a will or living trust makes a difficult life event just a little easier on your loved ones. If you are worried about the probate process, for yourself or for a loved one, read on to learn everything you need to know.
What is Probate?
Probate is the legal procedure your estate goes through after you pass away. During this legal proceeding, a court will start the process of distributing your estate to the proper heirs. All your assets must be located and assessed for the total value. Once that is done, taxes and debts are paid and the remaining value of the estate is distributed.
If you have a Will and/or living trust, probate is easier because it clearly states your wishes. Both documents are most helpful because they explicitly name your executor and beneficiaries. An Executor is a person charged with overseeing your final wishes. And beneficiaries are people receiving assets you bequeath them.
Some Parts of The Probate Process to Note:
1. Select Someone to Conduct Probate
If you established a will and named an executor, a judge will formally appoint the person you named as Executor (only in very rare cases would the court overturn your choice). The Executor then oversees the process and settles your estate.
If there is no will, the court will appoint an administrator (personal representative) for this role, an administrator. Usually, this would be your next of kin. An administrator acts exactly as an executor would.
2. Death Certificate
To start the probate process, your executor, administrator, or possibly lawyer, will inform the court of your death and submit an original copy of the death certificate.
- Have the Will Validated
Your will must be authenticated by the court to ensure it was properly signed and dated in accordance with the law. Once this is done, your will is considered valid.
4. Post a Bond
Posting a bond protects beneficiaries against possible errors an executor or administrator might make during the probate process. Bonds may be quite costly, but your estate will pay for them. Bonds are not always necessary because some states will waive them if your executor or administrator is also a beneficiary of your estate. You can also include a request to waive a bond in your Will.
5. Inform Beneficiaries & Creditors
Informing the beneficiaries and informing creditors are the biggest task most executors or administrators will undertake. It involves locating and informing any beneficiaries and possible creditors of your passing. They will also need to interact with creditors to settle your debts using assets from your estate.
The easier of the two tasks is informing the beneficiaries as the will states who they are. However, finding creditors can be more difficult and time-consuming, regardless of whether or not a will is present. When there is no Will, it should make sense that both parts of this process become exponentially more difficult.
6. Determine Value of Assets/Property
To determine the value of an estate, an assessment must first be completed. This will account for everything you own at the time of your passing. Sometimes, in larger estates, a professional appraiser may be needed.
7. Pay All Fees and Debts of the Deceased
Funeral expenses are typically paid from your estate. Once this is paid, the estate will finance the payments for medical expenses, filing and paying taxes, and handling other unpaid debts you may owe at the time of your death.
8. Distribute Remaining Assets
After all the debts have been paid, any remaining assets will be delivered to the appropriate beneficiaries. The executor or administrator will transfer deeds and titles into the correct beneficiary’s name, per the direction of the Will or the court
As you can see probate is a long and complicated process, it can be extremely time-consuming and can even cost a lot of money. However, the good news is that there are legal ways for you to avoid probate.
Drafting A Trust Will Help Avoid Probate:
Trusts are legal documents that establish legal transfers of your assets. There are many different types of trusts, each serving its own purpose. A trust is a legal arrangement in which a property interest is held by one person or the trustee. This is at the request of another person, known as the grantor. And this is for the benefit of a third person, known as the beneficiary. The trustee is legally obligated to administer the property for the benefit of the beneficiary.
This estate planning tool, trusts, can be utilized in a variety of ways and is most commonly used for its flexibility. Additionally, trusts do not require most of the formalities still required to make a legally valid will. Two common types of trusts used to protect assets AND to avoid probate are irrevocable trusts and revocable trusts.
- Revocable Trusts (aka living wills) are the opposite of irrevocable trusts. It lets you freely make changes to it up until you die. These changes are also known as amendments. It allows you to keep control of your assets while you are alive as opposed to giving up control in an irrevocable trust. You can also use it to determine who will inherit your assets after you die. A revocable living trust is preferable to a will since it does not require probate and can be revoked or amended at any moment while you are still alive. Revocable living trusts actually provide little asset protection but are a great way to ensure that your estate avoids the probate procedure after your passing.
- Beneficiary Designations– Name the beneficiary for your retirement assets (IRA and 401(k)), life insurance, and annuities will pass on the account owner’s death.
- Payable on Death (POD), Transfer on Death (TOD), Joint Tenants With Rights of Survivorship (JTWROS), and In Trust For (ITF)– assets (bank accounts, stocks, and savings bonds) with these designations will be automatically passed to the named beneficiary or joint owner after the account owner’s death.
- Joint Tenants with Rights of Survivorship and Tenancy by the Entirety (for spouses only)–these are types of ownership for real property that will be automatically transferred after the death of the owner or spouse to the surviving property owner or spouse.
Why is it Easier to Avoid Probate, Especially During the Pandemic?
The COVID-19 Pandemic is a wake-up call for everyone to implement an estate plan. As a result of the global health crisis, it is critical for you to be prepared in order to protect yourself and your family. The use of probate avoidance strategies is an essential part of your comprehensive estate plan to consider. Probate is time-consuming and e-court can come with technical difficulties.
One of the most important benefits of avoiding probate is that your assets will be automatically passed upon your death to your beneficiaries, without the delay and costs involved with a probate proceeding in the Surrogate’s Court. This is a significant advantage especially during the COVID-19 Pandemic because it allows a decedent’s beneficiaries to gain immediate access to assets for the payment of the decedent’s funeral and other expenses.
How can an estate planning attorney help?
One of the best first steps that you can take in creating an estate plan is to consult with an experienced attorney. Contact the Law Office of Inna Fershteyn today at (718) 333-2394.