When you hear the term probate, it is likely that you think of a process you want to avoid at all costs. While it is in fact a process many individuals attempt to avoid through careful estate planning, the reality is that many families will end up facing it. Although it is considered costly and lengthy, it can also be a process that is beneficial for those with small estates.
Whether you are creating an estate plan or seeking to update a current one, it is important to gain an understanding of probate and how it could play out if your estate goes through probate after your passing.
In simple terms, probate is a court-supervised process that initiates after the death of an individual. The process works to validate a will, if one exists, as well as any other estate planning documents. Furthermore, it helps retitle property and assets, distributing to the rightful heir. Finally, the process works to ensure the debts of the estate are identified and paid.
When probate must occur
Understanding when probate is necessary can help you gain a better idea on how and when you can avoid the process. When contract law, state law or trust law does not designate the transfer of assets and property, the probate process must occur to manage assets and property. This means that even when a valid will is present, the probate process may be necessary. However, when a person dies without a valid will, the probate process is necessary.
While assets and property awarded to heirs through a will require the probate process for retitling, the property that passes by contract law, state property law and trust law does not go through the probate process. This includes property such as retirements funds with named beneficiaries, life insurance policies with named beneficiaries, annuities with named beneficiaries, pay-on-death accounts, transfer-on-death accounts, property held as joint tenancy with rights of survivorship, property held as tenancy by the entirety and all trust property.
The probate process can be complex and creating an estate plan that helps you avoid probate can be multifaceted. As such, it is imperative that you fully understand your rights and options. This aids you in the drafting process, ensuring your rights, interests and wishes are protected.