Demystifying the Meaning of Probate
Posted on: 3 June 2021
As the owner of an estate, the last thing you want is for your estate to be distributed contrary to your wishes when you die. While not many people are fortunate enough to die after making a plan for their estate, the earlier you do it, the better. Without a will or estate plan, your estate is subject to probate. Your probate lawyer can help you grasp the concept of probate and its implications. Here's some basic information on probate.
What Is Probate?
Probate is where the state settles the financial affairs of a deceased person. This means the state distributes the deceased's assets. The state will appoint an executor to distribute the assets and handle the decedent's creditors.
The main challenge involved in the probate process is determining who will get what. This is especially difficult when there's no will or estate planning documents. Additionally, people may feel that their allocation was unfair. This is why it's essential to engage a probate law attorney to help you with estate planning.
What Does Probate Involve?
Probate is required mainly to transfer the legal title of the decedent's property and assets to their beneficiaries. Therefore, if there's no property or estate to distribute, there will be no probate. Additionally, the process also involves paying taxes. Creditors are required to file claims within a given deadline. This prevents unpaid or old creditors from making claims in the future against beneficiaries.
During the process, an executor is appointed to gather details regarding the estate's assets and debts. The executor will apply for permission to administer the estate and distribute the inheritance. This is known as a grant of probate. They'll then file an inheritance tax return, pay taxes, and repay the decedent's debts. Afterward, the executor will distribute the remaining estate.
Does All Property Go Through Probate?
Fortunately, not all property is subject to probate. Assets that aren't affected by probate include jointly owned property, designated beneficiary, and trusts. Joint-owned property isn't affected by probate because once a person dies, the ownership goes to the surviving owner. The main ways to own property with this right of survivorship include community property, tenancy by the entirety, and joint tenancy.
Designated beneficiary is when you select a person to be your beneficiary. Therefore, when you die, your specified assets are automatically transferred to the designated beneficiary. Some assets that have a named beneficiary include retirement accounts, life insurance, investment accounts, bank accounts, and cars or boats listed in a transfer on death form.
Lastly, trusts aren't subject to probate. The common types of trusts include revocable, irrevocable, and charitable trusts. Revocable trusts can be altered or modified while you're still alive. Irrevocable trusts cannot be changed or modified. A charitable trust provides financial assistance to a charity.
To learn more about how you can receive probate, contact a lawyer in your area.
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