is a legal process that takes place after someone dies. It includes:
in court that a deceased person's will is valid (usually a routine matter)
and inventorying the deceased person's property
the property appraised
debts and taxes
the remaining property according to the terms of the will (or state
law, if there's no will)
Typically, probate involves paperwork and court appearances by lawyers.
The lawyers and court fees are paid from estate property, which would
otherwise go to the people who inherit the deceased person's property.
DOES EVERYTHING HAVE TO GO THROUGH PROBATE?
No! Many assets do
not go through probate, including assets held in joint tenancy, assets
that have named beneficiaries, and assets held in living trusts. Small
estates may avoid probate, and estates passing entirely to a surviving
spouse may avoid probate.
Assets that are
held in joint tenancy titling – “Joint
Tenants,” “Joint Tenants With Right of Survivorship,”
“JT TEN”, or “JTWROS” – will not go through
probate, so long as there is one joint tenant still living. Title passes
entirely to the surviving joint tenant, although some paperwork may be
necessary to document the change.
to a surviving named beneficiary
will avoid probate. Examples include life insurance proceeds, annuities,
IRAs and most other retirement plans that provide for beneficiary designations.
Even U.S. savings bonds allow the owner to name a designated beneficiary.
The designated beneficiary must be a living person; otherwise the asset
still may be subject to probate. If you name “my estate” or
“the estate” as your beneficiary on such assets, this will
subject the asset to probate
Assets held in the
form of a “pay on death” (P.O.D.)
or “transfer on death”
(T.O.D.) account will pass to the person named to receive
that account upon the death of the account owner. Most banks and many
mutual funds and brokerage accounts can be set up with a P.O.D. or T.O.D.
beneficiary designation. So long as the named beneficiary survives the
account owner, this arrangement will eliminate the need to probate the
account. Another variation of this is the “in trust for” (ITF)
Assets held in
living trusts will avoid probate. Living trusts
may be revocable during the lifetime of the creator of the trust, or they
may be irrevocable, depending on the purpose for which they are created.
Either way, the assets in such trusts pass to the trust beneficiaries
according to the terms of the trust and are not subject to probate proceedings.
If one has a living trust, but some assets are not in the trust at the
time of death, those non-trust assets may have to go through probate in
order to get put into the trust.