People often have questions about what probate is and how it works. They also have heard things about probate in the news or from friends. Not all of what is said about it seems to be positive. Here are some basics to help you navigate this aspect of estate planning.
What is probate?
Probate is a legal process that occurs with a person's estate after they die. The will is filed with the court, the debts are paid, and final taxes are filed during the process. The deceased person's property is distributed according to the wishes laid out in the will. If a person dies without a will, the property is distributed according to formulas provided by state law.
Advantages of probate
- When papers are filed for a probate, a judge will provide a deadline by which creditors must file claims against the estate. If the deadline is missed, they are barred from further collections. If your relative had a large amount of debt, this could be useful.
- After the probate papers are filed, the process is public and transparent. If relatives are feuding over the estate, the directives laid out in the will are available for all to see. This may help mitigate the behavior of greedy or anxious relatives.
Disadvantages of probate
- The process can be costly. There are fees associated with attorneys, appraisers, accountants and the court process.
- Costs for probate are paid by the estate. These can add up to 5 percent or more of the total value of the estate.
- Probate can take over a year, in some cases to complete. If you are expecting a distribution of property from the estate, you won't see it until after the process is finalized.
There are ways to avoid probate and reduce the costs to relatives of managing your estate. The laws vary by state. The opportunities available also differ depending on your financial situation and particular needs.
If you want to find out more about ways to avoid probate, or you are currently involved in the process, you should talk to an estate planning attorney about the options.