How Do I Know if I Need Probate?

Probate is the legal process by which the estate is authenticated and the deceased’s assets are distributed to the beneficiaries. Whether or not you require probate depends on the type of property and how you own it, and the state laws in which you live. While probate can be a complex process for vast estates, it is a simple formality for most Americans. Essentially, probate allows a judge to give legal permission for assets to pass whether or not there is a last will.

Revocable Living Trusts (RLT) avoids probate proceedings and allows assets to transmit to beneficiaries faster. The assets in the trust bypass the probate court and usually take precedence over any property you designate in your will. A clear determining indicator of the need for probate is the value of the decedent's property. If the valuation is less than $100,000, the assets qualify for a simplified procedure in most states. As one example, to act without court intervention for settlement in a simplified procedure:

• The estate will have adequate assets to pay taxes and debts
• If there is a will, the executor petitions the court
• Without a will, the surviving spouse petitions the courts if the estate has community property and the decedent has no children or grandchildren from a prior relationship
• The court determines bypassing probate would be in the best interests of creditors and beneficiaries, and the executor is not a creditor

This small estate affidavit procedure is helpful if the probate asset valuations, excluding any property interest to surviving spouses or domestic partner's community, minus liens, and encumbrances, is no more than $100,000. In the absence of a will, the probate process must ensue, and the distribution of whatever assets may exist do so under the state intestacy law. There are ways to avoid probate even with a sizeable estate through careful planning. Probate avoidance not only will reduce legal fees in the long run, but it can mean avoiding estate tax, which can be significant in a very wealthy estate.

Aside from an RLT, life insurance policies pass outside of probate. POD accounts (payable on death) can pass to your beneficiary without probate for your checking and savings accounts, money markets, CDs, and US Savings bonds; however, each account will require a complete beneficiary registration. Retirement accounts such as a 401(k) or IRA also pass to an adequately designated beneficiary outside the probate court.

Most pensions that are inheritable are under a form of trust and, as such, will also maintain their valuation outside of the probate process. In military benefits, a death gratuity, a lump sum payment to survivors made by the US Department of Defense, is $100,000 and is tax-exempt. If there is real estate as joint tenant ownership, the property will pass outside of probate as well.

In the absence of an RLT, using named beneficiaries in POD accounts and retirement accounts, or the probate process, there is almost no way to own inheritable property legally. A quasi exception exists in Florida, where a family may own property in a decedent's name if they do not sell it and continue paying taxes. Each state has differentiation in inheritance laws, so it is essential to retain an elder law attorney for the state where you live.

Most families will contact the probate court whether or not the bulk of the estate will pass through the probate process. The will executor must file a request for probate in the county where the decedent was living and provide a death certificate. At this time, the probate court likely approves the executor named or designates one and provides letters of testamentary which legally permits the findings and processing of the decedent's financial and other property accounts. To get specific answers to your estate questions regarding passing your probate and non-probate assets to your heirs, speak with an estate planning attorney. Please contact us today at (408) 371-6000 to schedule a free consultation to discuss your legal matters.