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Certainly probate is a dirty word for most, especially for those who have first hand experience. Many people have heard of probate and most have a good idea of what probate is, however, a more clear and concise understanding of what probate is will help avoid it, if necessary.
Probate is the process by which the court determines how your property is to be divided after a person passes away. The court will divide the decedent’s money and property between his/her heirs, creditors and attorneys. In fact, court and attorney’s fees will typically range between 3-7% of the total estate’s value. Further, probate is very time consuming, generally lasting from 9 months up to 2 years.
A common misconception is that a person who dies with a Will (“testate”) can avoid probate. Unfortunately, a Will must still be submitted to the scrutiny of the court to determine if it is valid, to hear any objections to the Will, to order payment to creditors and to supervise the process to assure that the remaining property is distributed according to the mandates in the Will. However, a Will is better than nothing at all, since it still gives a person some control after they pass away.
When a person dies without a Will (“intestate”) the probate court will appoint a personal representative (“administrator”) to manage the claims against the deceased person's estate. In addition, the administrator will pay creditors and attorneys, and then distribute any remaining property. When a person passes away without a Will or Trust all power of distribution is lost and their property is subject to the laws of the state.
In most instances, the best alternative to probate is the implementation a Living Trust or other estate planning instrument, which will bypass probate altogether.
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2 comments:
Nice article. With all the negativity and unreast about the economy as of late, people often fail to take the necessary steps to protect their family members and their estates. This truly is a situation of "Those who fail to plan are actually planning to fail."
The cost of probate was really driven home to me this year. My mother passed away in Febrary 2008. As of March 2009 probate has yet to be finalized. Unfortunately the value of the probatable assets has decreased approximately 40% since her passing. Since probate fees are based on the value of the estate at the time of death, the decline in market value in the year since her death has effectively doubled the probate expense.
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