Planning Your Legacy

The Probate Process: With and Without a Will

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What is probate?

Probate is the period during which the legal system determines how your assets will be distributed after your death.

What's the probate process like?

Each state has specific laws to determine the steps involved in probate, so the timeline can vary by state. But the probate process generally goes like this:

Name an executor.

When you die, an executor (either named in your will or appointed by the state) will manage the probate process on behalf of your estate. The executor collects and manages your assets; pays your debts, expenses and taxes; and distributes your assets according to your will, if you have one.

Being an executor is a time-consuming, important job, so you should choose your executor carefully. You can choose a family member or close friend, or a professional who may receive compensation for being your executor.

Release short-term funds.

Probate generally takes about six months but can sometimes take more than a year. To help get through the probate period financially, in most states immediate family may ask the probate court to release short-term funds during that process.

Resolve debts.

Notice will be given to creditors, heirs and the estate recovery program regarding your death. Creditors are given about four months to file any claims.

Generally, your estate is responsible for any debt you leave behind, and your debts will be paid during probate. If your estate has enough cash, it will be used to pay off your debt. If your estate doesn’t have the cash but has enough assets to cover your debts, some of your assets will be sold during probate to pay your debts.

If your estate doesn’t have adequate assets to cover the debt, your estate will pay off the debt in the order determined by state law. Then creditors must generally write off any remaining unpaid debts.

Settle the estate.

After all debts and taxes have been paid, the executor gets permission from the court to divide up what's left of the estate to its legal heirs. Finally, the executor produces a final accounting report to the court, and the estate is settled.

How can you make probate less stressful?

Probate can be time-consuming, costly and stressful for your loved ones. The probate period can also result in conflict and hard feelings among your family members — especially if you don’t have a valid will. Here are a few ways you can ensure the probate process goes smoothly — and your wishes are carried out:

Create a will.

This legal document contains instructions to be carried out after your death. In addition to directing distribution of your financial assets, your will may also name someone to care for your children if both parents die before the children turn 18.

Ensure that your will is valid.

With the emergence of do-it-yourself legal documents on the internet, many people want to save money by creating their own wills. A DIY will may be appropriate if your financial situation is extremely simple. For instance, perhaps you’ve never been married, don’t have children, have modest assets and plan to leave all of your assets to one close relative.

However, most people’s financial circumstances are much more complex than the example above. An attorney can advise you on your unique situation and create a customized will and other associated documents tailored for your needs. A qualified attorney will also help ensure that your will is properly witnessed, signed, filed and stored so you can be confident that it will be executed according to your wishes after your death.

If your will is incomplete or doesn’t comply with the laws of your state, it could be contested or even deemed invalid. Fixing problems with your will after your death usually means a much longer and more expensive probate period and the possibility of your assets being distributed differently than you had intended. And of course, a long, complicated probate period can also contribute to additional stress for your loved ones.

A will that has been properly filed, witnessed and stored will also help protect against fraud. For instance, someone could find the sole copy of your will and delete or alter pages or destroy the will completely. This possibility for fraud is much less likely if you’ve followed the appropriate protective measures with the help of an attorney.

Hold your property in a living trust.

This may be one way of avoiding probate. Your attorney can help you set up a living trust, which allows you to put your assets in a trust while you’re still alive. (This differs from other trusts that are generally created after your death.) While you’re living you can manage the assets in the trust just as you would manage the rest of your assets. After your death the funds will be distributed according to the terms of the trust without probate. Your attorney can help you determine if a living trust is right for you.

Name a beneficiary.

Name a beneficiary to your life insurance policy, retirement plans — such as a 401(k) or IRA — and similar assets. These assets will go directly to your beneficiary and skip the probate process.

Hold assets as a joint tenant with right of survivorship.

Hold assets as a joint tenant with right of survivorship that designates “transfer on death” or “pay on death.” This can include assets such as real estate, automobiles, bank accounts and certain securities or brokerage accounts.

Hold assets as community property with right of survivorship.

Hold assets as community property with right of survivorship that passes certain assets directly to your spouse. In some states you may need to designate assets as community property with right of survivorship. In other states, assets acquired during marriage are automatically owned equally by both spouses.

Federal law allows your surviving spouse to take over the mortgage on your home (if he or she qualifies for it financially) without having to immediately pay the balance.

Give away property before your death.

Give away property before your death. If your estate is worth at least $2 million and you’re on track with your financial goals, you might want to consider financial gifts to your heirs now. You get the fun of seeing them enjoy your gift, and can help manage tax implications of larger gifts.

If you have less than $2 million, you will likely want to focus current assets on your own retirement instead of giving money away now.

Where can you get more information about probate?

Because probate laws vary from state to state, you will want to check with a local probate lawyer who is experienced in estate planning. He or she will be able to help answer any specific questions and can help you put together a plan that will make the process go as smoothly as possible for your loved ones.

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