There is a widespread misunderstanding regarding wills, estate handling, and the probate procedure. Many individuals believe that a will must always go through the probate process. However, the truth is that not all Wills and assets require probate. There are several reasons why a Will might not need to go through the difficult probate procedure. So when precisely does a Will require probate?
Do All Wills Go Through Probate?
No, not everyone will require a court hearing. The majority of will do; however, there are a few situations in which a Will may evade the entire procedure. Even though the actual guidelines may change based on the state where you reside, some aspects of property and assets may be universal.
Practically every state has a procedure for dealing with small estates. Even if your state doesn’t enable you to avoid the probate procedure, a streamlined approach is typically available, with less paperwork and little court oversight. The overall worth is the deciding factor of the estate. If any of the following apply in your state, you could be able to escape probate:
- To claim property, beneficiaries must submit a court-issued affidavit.
- A financial institution will accept an affidavit to transfer ownership from a surviving spouse or dependant.
Assets held jointly: Assets held under a shared tenancy are very prevalent. Suppose you have a property jointly owned with rights of survivorship with your spouse, children, business partner, or anybody else. In that case, the property will automatically pass to the remaining owner upon your death. The catch here is a requirement of probate if both owners passed away simultaneously or if the surviving owner also passed away without adding another joint owner to the title.
Property in a Revocable Living Trust:
Anything contained in a Revocable Living Trust that owns assets would not be subject to probate. Living trusts completely escape probate. Instead, they contain a Terms of Trust Agreement that dispenses with probate and enables assets to pass to beneficiaries immediately.
It’s fairly unusual to draft a “Pour-Over Will,” which serves as a safety net for any assets you might not have included in your living trust. Upon your passing, the Pour-Over Will automatically transfer assets to the Trust. Be aware that probate would be necessary for this situation.
Property with Named Beneficiaries:
You can avoid probate by naming beneficiaries or setting up Payable on Death (POD) or Transfer on Death (TOD) accounts. Any account or insurance will have an immediate transfer with a stated beneficiary upon your passing.
When Does a Will Enter the Probate Process?
Your Will often goes through probate after your passing to a proper following of instructions and intentions. However, probate also happens if you pass away without making a will or other estate plans. One refers to this as intestate death. Another situation where there is a requirement of probate is when there are incorrect names of the beneficiaries, reject the inheritance, or are otherwise ineligible, such as when a beneficiary dies before you do.
When can there be an execution of a will without probate?
You may set up an estate that avoids probate with proper planning. Probate may be expensive, time-consuming, and stress-inducing for your loved ones. Along with these disadvantages, the probate process might result in significantly higher legal bills and estate taxes. And the sense of privacy is the ultimate benefit of avoiding probate. Probate is a public record subject, so you might want to look into ways to avoid it if you want some or all of your estate to remain private (including whose assets belong to whom).
Remember that one can follow any of the following approaches to avoiding probate successfully:
- Creating and financing a Revocable Living Trust – The utilization of the assets you leave in your Living Trust while you are living. Still, they transfer directly to the beneficiaries of your Trust when you pass away, avoiding probate.
- Designating beneficiaries on your life insurance policies may streamline and simplify the process of transferring the funds without going through probate after your death. Make sure your beneficiaries are current and still applicable.
- Using retirement funds with beneficiary designation features to avoid probate – Certain retirement accounts allow you to choose a beneficiary, which results in the account amount being transferred to that individual upon your demise.
- Real estate ownership as joint tenants – There are two owners under the definition of joint tenancy or joint tenants with the right of survivorship. When the original owner dies, the property immediately goes to the survivor.
What Takes Place If You Avoid Probate?
Creditors have the right to continue seeking monies they feel the estate owes if the probate procedure is not completed correctly. The probate process effectively closes any debts an estate is liable for. If you skip the probate process, you can be held personally responsible for any fees.
There is no other method for beneficiaries to acquire legal ownership of property unless it has been deliberately set up to avoid probate before the owner’s demise, even if, theoretically, no one will come knocking on your door asking for a Will to go through probate.
There are exceptions to this in several states. For instance, in some places, if the property’s taxes are paid and it is not sold, the family may continue to possess it even after the decedent’s passing. To learn more, see the state legislation in your area.
Probate can be messy and difficult, but comprehending the procedure and the end aim could seem less stressful. Although there are many good reasons to avoid probate, including emotional and financial ones, there are methods to structure up your estate such that it primarily (or completely) avoids probate.