What is it? Why does every attorney tell you, you should avoid it?
The short answer is, Probate Court is where state proceedings are held to determine who is entitled to the assets/property of someone who died. Assets will be inventoried and appraised and all this information will be submitted to the court and is public record for all to see and read.
Yes, Your business will be out in these streets and we all know TMZ is watching.
Common Terms YOU SHOULD KNOW:
Estate: all the money, property, and any other asset owned by or that they have a controlling interest in at death.
Decedent: The person who passed away (with or without a will) whose estate is going through probate.
Executor or personal representative: The person in charge of carrying out the instructions in the will.
Administrator: A court-appointed executor, if someone dies without leaving a will.
Intestate: A case where someone dies without a will.
Testate: A case where someone died with a will.
Intestacy: State laws determining how to distribute such estates.
Letters testamentary: A document from a probate court authorizing the executor to start carrying out the instructions left in a will.
Notice of probate and notice to creditors: Notices that the executor has to submit, in writing, to the heirs (“interested parties”) and creditors. Everything is public record in a probate case. This is why TMZ knows so much about stars who have passed away with or without a will but nothing about stars who had Trusts.
Small estate affidavit: Documents or processes that can allow you to skip or shorten certain aspects of probate (i.e. distribute property without a lengthy court process). Estates below a certain value (depending on your state) are eligible for this.
What's The Probate Process?
If you have a Will, the Probate Court will determine if your Will is legally valid, and approve an executor to see that your wishes are carried out, and ensure that your estate pays applicable taxes.
Having a clearly written will is one way to make the probate process easier on your loved ones. After all, your will doesn’t only specify who should inherit what. It also designates who you’d like to take care of your kids if both parents were to pass away, plus the executor who should take care of everything.
If you die without a will, the probate court will rely on your state’s intestate law (default rules) to figure out how to distribute your stuff. (Note: Prince’s heirs are still having trouble inheriting his assets because he didn’t have a will? Prince passed away in 2016, leaving all six of his siblings to inherit his assets because he died without a will. His estate, run by Comerica Bank, has not been able to see eye-to-eye with the relatives (or the IRS) so no money has been distributed. although the court, the bank, and the attorneys are getting paid.) So when we say, avoid probate this is why. Families get stuck there and usually don't see close to the amount that was left to them.
FEES & EXPENSES
Typically, probate involves paperwork and court appearances by lawyers. The lawyers and court fees are paid from the estate, which would otherwise go to the people who inherit the property. As you read, Prince's Heirs have been in court for years with no end in sight so the fees eat away at the estate. Probate ALWAYS costs money and/or time even if you think you have a simple estate. It only takes one creditor or family member to disagree with the distribution to keep the probate open for an extended period of time.
Assets Subject to Probate
Not every asset you own is subject to probate, you should inventory your assets and speak with an attorney to find out what you have that could potentially avoid probate if set up properly. For example, these assets generally don't go through probate:
Retirement and pension accounts that have beneficiaries designated
Proceeds of life insurance policies
Payable-on-death accounts
Real estate co-owned with a joint tenant who has a right of survivorship
Assets held in trusts
Have more questions? Check out my frequently asked questions page. The best advice I can give is to speak to an estate planning attorney in order to understand your unique situation and create an estate plan that allows your family to avoid this process and focus on grieving your loss.
✨YOUR WEALTH BEST FRIEND™️✨, Jala Eaton, Esq, CTFA is an estate planning attorney, fiduciary, and certified trust and fiduciary advisor with a mission to people build and protect their assets through investing and estate planning. The racial wealth gap is the problem and Generational wealth is the goal and the solution. When not advising her clients or talking about money on her blog and Instagram she likes to attend concerts and the private dance parties her daughter holds in their living room.