01 Jul What is Probate and Why Avoid Probate
“Probate” is a court supervised process used to settle an estate when assets can’t be directly transferred to a beneficiary or a joint owner of an asset. The probate court oversees the process of identifying the deceased’s property, paying any debts, identifying proper beneficiaries, and the distribution of property to those beneficiaries. The Personal Representative is the person named by Will and appointed by the probate court to administer the estate. Some states use the terms executor or administrator. The probate process serves has two distinct purposes: First, probate the Will to establish the validity of the Will and appoint the personal representative. Second, administer the Estate to carry out the provisions of the Will under the supervision of the probate court.
STEPS IN PROBATE
In a typical estate administration, the personal representative has to perform a number of tasks, including:
- Commence and file the application for probate and administration
- Collect, value and inventory all assets
- Handle creditor’s claims
- File all tax returns
- Distribute the estate
- Prepare an estate accounting
- Close the estate administration
Probate does provide the benefit of court supervision to ensure a decedent’s property is accounted for and properly distributed. However, probate also has some disadvantages, which is why some people seek to “avoid probate.” Probate can be expensive, time consuming, is a matter of public record and leaves your assets inaccessible for a period of time.
Remember that only a person’s probate property is subject to the probate process. Most life insurance, retirement accounts, and jointly held property with rights of survivorship all pass automatically without probate. Any property held in a Trust is not subject probate. The advantages and disadvantages of the probate process should be considered in deciding whether “avoiding” probate should be part of your estate planning goals.