I constantly hear the word probate being thrown around lately. But I don’t seem to have a grasp on what it is and why it is so important to your financial future. Probate I learned is the legal process that takes place after someone dies. It usually includes proving in court that a person’s will is valid, identifying and taking inventory of the the person’s property, having their property appraised, paying off debts and taxes and then distributing the remaining property as the will directs.
So how does the probate process work? First off, before your death you must create a will to distribute your assets to your loved ones. After your death, the person you named in your will as an executor or the person appointed by a judge then has to file your papers in a local probate court before any of your family is distributed any bequeathed assets. The executor’s job is to prove the validity of the will and presents the court with lists of property, debts, and who is to inherit what is left. The executor must then find, secure and manage the assets during the probate process which can take some time, up to several months and sometimes even years.
Depending on your financial situation such as debts and taxes, the executor may have to decide whether to sell your real estate or other properties to pay them off on your behalf. Cases like this sometimes makes it hard for the potential benefactors to get their claim because they in fact can get “pushed out” of the will because of all the debt. So having your financials in order makes it incredibly helpful in the future for your loved ones. In most states however the family can ask the court to release short-term support funds to help them while probate proceedings continue. Eventually, the court will grant the final debts and taxes and divide the rest among the people named in the will and finally transferring the property to its new owners.
Although the probate process seems long and daunting it is a necessary part of legalities. In fact most states allow a certain amount of property to pass free of probate or through a simplified probate process. States like California allow you $100,000 of property to pass free without probate.
If most cases of probate the executor listed in the will does the job of distributing assets and handling with financial debts. If there was no will or there is no executor listed in the will then the probate court will administer someone to handle the process. Typically this goes to the closest relative or to the person who is set to inherit most of the person’s assets. Often times many family members share the responsibility of paying off the debts, filing taxes and distributing property and assets.
Probate is a grueling process and hardly benefits family members or beneficiaries as its takes a lot of time and money to complete. Probate is used mostly if your estate has complicated problems such as large debts that can be paid from the property you leave behind. Avoiding probate depends on three factors; your age, health and wealth. For example, if you are young and in good health having a complex probate-avoidance plan may not be helpful as you may have to change it later on in life as you get older. If you have little property it may not be worth your time as your property may qualify for a state simplified probate procedure. And if you’re older and in ill health, with a large amount of property than you will want to do some probate avoidance planning.
Probate is an important and time consuming process that happens to many people after the death of a loved one. It is best to create a well designed will and update it yearly. As you get older consider your family and the effects of the probate process might have on them. Having a qualified probate attorney to help you with this complicated process can help you and your family save time and money in the future.
