Most people we talk to have heard of probate and want to avoid it, but they don’t know why or how. That isn’t necessarily a bad thing. If you’ve never had a loved one die, you may never have experienced it. Probate is the legal process validating a will or settling a person’s affairs.
How probate works
The process varies by state. It involves these steps: get a death certificate, choose an executor; identify assets; pay off debt; and pay beneficiaries. If there’s a will, the judge validates the will.
A will usually states the executor, assets, and beneficiaries, as well as outstanding debts. This makes the probate process much easier. However, it’s possible that someone may contest the will. One example is a child may object if a new spouse is named as executor.
The executor is typically named in the will, but an executor may be a professional or appointed by the court.
The executor’s job
The executor is responsible for taking inventory and control of the decedent’s assets. Their job is to protect those assets if there is any kind of dispute. In many cases, the executor hires an appraiser to look at the “death value” of assets if the the court hasn’t independently appointed an appraiser.
Additionally, the executor must notify any creditors that a death has occurred. It can also include publishing an obituary so that any unknown creditors have an opportunity to come forward.
Lastly, the executor resolves the estate. This includes paying off debts and divvying up assets.
Who pays for probate?
As you can imagine, the probate process takes time to complete. It also may require lawyers, court appearances, or both. If so, legal fees are generally paid from the estate.
It’s not uncommon for it to take up to a year. In some cases, beneficiaries can ask the court to release funds during the probate period. (For instance, you might ask a probate judge to be reimbursed for funeral expenses before the estate is settled.)
Intestate
If there is no valid will (either because the decedent did not prepare one, or because the court rules the will invalid), the estate is said to be “intestate.”
In this case, any assets left over after debts are paid go to the closest living relative. Who that relative is may vary depending on state law and personal circumstances.
Avoiding probate
While having a will can facilitate probate, it doesn’t get you out of the process. It’s important to know that some property passes outside of probate (notably life insurance policies, trusts, jointly owned property, and payable-on-death accounts).
If you want to avoid the probate process and protect your financial details from becoming a part of the public record, consider creating an estate plan that includes a trust.
If you haven’t created a trust, we can help. At Redeem Wealth, we would love to discuss what makes sense for you and your family. Please contact us if you have questions or would like to talk more!
[Jeremy Sharp, financial planner and owner of Redeem Wealth, a faith-driven wealth management firm, is passionate about the colliding worlds of faith and finance. His family of five are active in their neighborhood church, where he also leads the worship team. Jeremy and his wife Grace are passionate about the foster care crisis and support organizations that bring awareness to how people can love and support underserved adults and kids in their local community. Contact: Jeremy@Redeemwealth.com]
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