Estate Planning 101

The Probate Process: Everything You Need to Know

Probate is the legal process through which a deceased person's estate is distributed to heirs and designated beneficiaries. The process varies a lot between states. Here’s what you need to know.
September 21, 2023

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Probate is the legal process through which a deceased person's estate is distributed to heirs and designated beneficiaries, and any debt owed to creditors is paid off. It typically involves an overview of the deceased's assets, payment of any outstanding obligations, and the distribution of the remaining estate under the supervision of a probate court. 

The probate process varies a lot between states. Here — generally speaking — is how it works.

In this article:

The probate process: step-by-step

Whichever state you’re in, the probate process generally follows these steps:

  1. Filing a petition: A petition must be filed with the probate court to either admit the will to probate and appoint the executor. Or, if there's no will, to appoint an administrator of the estate.
  2. Notification: Next, notice is given to all heirs under the will or to statutory heirs (if no will exists), sometimes involving a publication in a local newspaper to alert potential creditors.
  3. Inventory of the estate: The executor/administrator then assembles, catalogs, and appraises the deceased person's assets.
  4. Payment of estate debts: Any outstanding obligations or debts of the deceased person are paid off from the estate's funds.
  5. Distribution of the remaining assets: After all debts, taxes, and administrative costs have been paid, the remaining assets are distributed to the heirs or designated beneficiaries.

Which assets are subject to probate?

Solely-owned property: Any asset that was solely owned by the deceased person with no designated beneficiary is subject to probate. This could include bank accounts, cars, houses, personal belongings, and business interests.

Tenant in common property: If the deceased person owned property as a tenant in common with others (not as joint tenants), their share of the property is subject to probate.

Interest in a partnership or corporation: The deceased person's interest in a partnership or corporation will generally be subject to probate unless there is a buy-sell agreement or a shareholders' agreement that specifies otherwise.

Investments: Investments, including stocks, bonds, and mutual funds owned solely by the deceased person, will also go through probate.

Some assets don’t have to go through probate, such as:

Jointly-owned property: Property owned in joint tenancy or as tenants by the entirety will pass to the surviving owner(s) without going through probate.

Life insurance policies and retirement accounts: These assets are not subject to probate if a beneficiary is named. The proceeds from life insurance policies and retirement accounts like IRAs, 401(k)s, and annuities will pass directly to the named beneficiaries.

Trust assets: Assets that have been placed in a trust, such as a revocable living trust, are not subject to probate. The trustee can distribute these assets to the named beneficiaries without court supervision.

Pay-on-Death and Transfer-on-Death accounts: Many states allow for "pay-on-death" (POD) designations for bank accounts and "transfer-on-death" (TOD) designations for securities. These assets will pass directly to the named beneficiary without probate.

Community property with right of survivorship: In community property states, if the deceased person was married and held property as community property with right of survivorship, the surviving spouse will inherit the property without probate.

Gifts: Anything that the deceased person gave away before they died isn't part of their estate, so it doesn't go through probate.

It's worth noting that while avoiding probate sounds advantageous—and often is—there are sometimes reasons to allow an estate to go through the probate process. 

For instance, creditors have a limited amount of time to file claims against the estate during probate, but this might not be the case with non-probate assets.

What’s the minimum estate value for probate? When do you have to go through probate?

The need for probate is typically based on the type of assets the decedent owned (i.e., if they owned assets in their name only) rather than the value of those assets. However, many states do offer simplified probate procedures or exemptions for "small estates," which are determined based on their value.

The definition of a "small estate" varies significantly by state. In some states, any estate under a certain threshold (like $50,000 or $100,000) is considered a small estate and may avoid the regular probate process. In other states, the limit might be lower, like $20,000 or $30,000.

Certain assets are usually excluded from this total, such as vehicles or real property, and some states differentiate between estates with real property and those without.

For example, in California, the threshold for a simplified probate process is $166,250 (as of 2022), whereas in New York, estates valued at $30,000 or less can use a simplified process.

If an estate qualifies as a "small estate" under state law, the executor or heirs might be able to bypass probate entirely or use a streamlined probate process. This might involve a simplified court proceeding or transferring property with a simple affidavit, which is a sworn statement that lists the assets of the estate and the heirs.

Keep in mind that the specific procedures, and the value limits, can vary widely from state to state.

How long does probate take?

The probate process can be time-consuming, and the exact duration varies widely depending on things like the complexity of the estate, the nature of the assets, the efficiency of the executor, the specific probate laws in a state, and whether or not the will is contested.

General Timeframe

On average, probate can take between 6 months to 2 years. However, more complicated estates can take even longer. Here's a rough breakdown of the time needed for each step:

Filing the will and petition: It typically takes a few weeks to prepare and file the petition for probate with the court, assuming there are no complications in locating and validating the will.

Waiting period for court appointment: Once the petition is filed, the court usually takes a few weeks to officially appoint the executor or administrator. This timeframe can be longer if someone contests the will or the appointment of the executor.

Creditor's claim period: Creditors usually have a certain period in which to file claims against the estate. This period varies by state but is often around four to six months.

Inventory and appraisal: The executor or administrator has to inventory the deceased's assets and sometimes have them appraised. This process could take several months, depending on the complexity and size of the estate.

Paying debts and taxes: Once the creditor's claim period has ended, the executor can start paying debts and taxes. This process can take a few weeks to several months, depending on how many creditors there are and whether there are disputes over claims.

Final distribution: After all debts and taxes have been paid, the executor can distribute the remaining assets to the beneficiaries. If there are disputes among the beneficiaries, this can delay the process.

How much does probate cost?

The cost of probate can vary widely depending on various factors such as the size and complexity of the estate, whether or not the will is contested, and the specific probate laws and procedures in the state. 

Generally speaking, the expenses of probate may include court fees, attorney fees, executor fees, appraisal costs, and other administrative costs.

Here’s a general breakdown:

Court fees: Court fees can range from a few hundred dollars to over a thousand dollars, depending on the state and the size of the estate.

Executor fees: Executors are often entitled to a fee for their services. This fee can be a flat amount, an hourly rate, or a percentage of the estate, depending on state law and what is specified in the will. In some states, the fee is calculated based on a sliding scale; for example, 4% of the first $100,000, 3% of the next $100,000, and so on.

Attorney fees: The cost for legal assistance can also vary significantly depending on the complexity of the estate and the attorney's rates. Some states have "statutory" or "probate" fees that are based on a percentage of the estate, similar to executor fees. In other states, attorneys charge by the hour or a flat fee.

Appraisal costs: If the estate includes assets that must be appraised, such as real estate, art, or business interests, there will be appraisal fees. These can range widely based on the type of asset and the appraiser's rates.

Other administrative costs: These can include costs for postage, publication of notices, copies of death certificates, and so on.

As a general rule of thumb, you can expect probate costs to range from 3% to 7% of the total estate value, though this can be higher if the will is contested or there are complex assets.

It's important to note that state laws can have a significant impact on the cost of probate. 

For example, in states like California and New York, attorney and executor fees are calculated as a percentage of the estate, which can lead to higher costs for larger estates. 

On the other hand, in states like Florida and Texas, these fees are not set by law and can be negotiated.

Who’s responsible for probate? The role of the executor

The responsibility for handling the probate process typically falls to the "executor" or "personal representative" of the estate. This person is often named in the deceased person's will. 

If there's no will, or the will doesn't name an executor, the probate court usually appoints an administrator, who is often the closest capable relative or a neutral third party from the court.

The executor's main duties include:

  • locating the deceased person's assets and managing them during the probate process
  • deciding if probate is necessary, and filing the necessary documents with the probate court
  • notifying creditors, beneficiaries, and heirs that the estate is in probate
  • paying any debts and taxes owed by the estate
  • overseeing the distribution of the deceased person's property to the individuals named in the will or, if there's no will, to other heirs as per state law

The executor is also responsible for dealing with any disputes that arise during probate, either between different beneficiaries or between the estate and third parties. If disputes escalate, they may have to be resolved in probate court.

Since the probate process can be complex, many executors hire attorneys to help navigate the probate process, especially when the estate contains significant assets, the will is being contested, or family conflicts arise.

Managing debts through probate

When a person dies, their estate is used to pay off their debts. The responsibility of settling these debts falls on the executor or personal representative of the estate. They have several duties regarding the payment of debts and handling creditor claims.

Notice to Creditors

In most states, the executor is required to publish a notice to creditors in a local newspaper. This notice informs creditors of the death and provides information about how and when to file a claim for any money owed. Even if not required by state law, this step is often taken as a precautionary measure to limit the estate's liability to unknown creditors.

Filing of Claims by Creditors

After the notice is published, creditors typically have a limited time period (specified by state law) during which they must file their claims. The time limit varies by state, but it's generally a few months.

The claim should include the amount of the debt and supporting documentation. If a creditor doesn't file a claim within the specified time, they may forfeit their right to collect the debt.

Reviewing Claims

Once the claims are filed, the executor reviews them and determines whether they are valid. If a claim is deemed invalid, the executor can reject it. The creditor can then either accept the rejection or contest it in court.

Payment of Debts

Valid debts are then paid out of the estate assets. Usually, the executor must follow a particular order in paying debts. This order is generally outlined by state law, but often it is:

  • Funeral expenses
  • Administrative expenses (including court costs and legal fees)
  • Taxes owed to the federal and state government
  • Secured debts (like mortgage loans or car loans)
  • Unsecured debts (like credit cards)

If there are not enough assets to pay off all debts, the estate is considered "insolvent." In this case, similar rules apply, with debts being paid in the order above until the assets run out. 

Some assets may be exempt from being used to pay debts, depending on state law. The heirs are usually not personally liable for the debts of the deceased unless they co-signed the loan or are a spouse in a community property state.

Final Accounting

Once all valid debts have been paid, the executor will usually submit a final accounting to the probate court. This accounting outlines all the financial actions taken on behalf of the estate, including how the debts were paid. 

The court, often with the agreement of the heirs, has to approve the final accounting before the estate can be closed and the remaining assets distributed to the heirs.

Remember, the process can be complex and varies by state. It's recommended to consult with a probate attorney to understand the specifics in your situation.

How probate varies between states

The specific rules and regulations around the probate process can vary significantly from state to state, largely due to differences in probate codes and laws. Below is a general overview of some key differences:

Uniform Probate Code (UPC)

The UPC was established to simplify the probate process and make it more uniform across the country. Currently, 18 states have adopted the UPC in its entirety, while others have adopted portions of it. The UPC states offer "unsupervised probate," which minimizes court intervention, providing for a more streamlined process.

Non-UPC States

These are states that have not adopted the UPC and have their own probate codes. California, for example, has a notoriously complex and costly probate system. In Texas, probate is typically quicker and less expensive, with independent administration allowed in most cases, reducing court supervision.

Small Estate Procedures

Many states offer simplified probate procedures for small estates, though the definition of a "small estate" can vary widely. For instance, in Oregon, an estate can use the small estate process if the total assets are worth $275,000 or less, while in New York, the limit is $30,000.

Probate Avoidance Techniques

State laws also vary in terms of what probate avoidance techniques they recognize. These can include joint ownership, payable-on-death designations, and living trusts. Florida, for example, is known for its homestead laws that protect a primary residence from being forced into probate.

Community Property States

In community property states, such as Arizona and California, spouses jointly own most, if not all, property. This aspect can significantly impact the probate process, particularly if one spouse dies without a will.

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