You have likely heard of using various legal maneuvers to avoid having to probate a will. Probate is the process of filing the deceased's last will and testament in probate court, which allows a probate judge to oversee and rule on its contents and validity. There are several methods that keep some property out of probate, such as trusts and payable on death and transfer on death designations on various accounts, however it may not be possible to avoid probate altogether. Probate does serve a useful purpose in most circumstances, so read on to learn more about the use of probate in estate planning.
- If a will is found after a deceased's death, there must be probate. Even if some of the property addressed in the will is covered with a trust or other legal documents, the mere existence of a will automatically means probate. If a person dies without a will, which is also referred to as "intestate," probate will likely be need as well.
- You can make some assets "skip" probate and go directly to beneficiaries by designating them either payable-on-death or transfer-on-death. The beneficiary simply needs to supply a certified copy of the death certificate to take ownership of any asset from life insurance, bank accounts and retirement accounts to stocks and bonds.
- A trust serves a similar function as the will, with a trustee taking the place of an executor and beneficiaries being named. Any assets addressed in a valid trust do not need to go through probate.
- A major function of probate is to allow creditors to come forward and place a claim on the estate for debts owed by the deceased. A notice is published in a local newspaper to give potential creditors an opportunity to come forward within a specific period of time. Executors and family members may be aware of most financial obligations, but should also be on the alert for loans co-signed by the deceased.
- During probate, administrative bills should be paid. Administrative bills include day-to-day bills like (some) utilities, taxes and mortgages. Final bills, like personal loans, auto loans and credit cards bills should await the completion of probate.
As you can see, probate consists of more than simply a transference of property, but is also meant to handle debts. Learn more by speaking with an estate attorney about how you can reduce the amount of property that must undergo probate.