Probate is a dreaded word for many, but many people still die without a will or living trust and their property must pass through probate to be distributed by the government according to the probate law in their state instead of going to those they would have chosen to receive them.
Questions About Probate are Common
Many years ago I used to spend a great deal of time driving. In fact, while I was in graduate school I sometimes commuted over 200 miles one way to school twice a week. On many occasions I listened to Bruce Williams on talk radio and even now I receive his daily Smart Money by email.
Just this last week (as this was written) he answered a question regarding an elderly man who was avoiding making a will, as many of us do. A relative asked a question wanting to know ,of course, what would happen when the man died.
The answer was obvious. Probate.
Probate—When You Die Without a Will?
Whatever the amount of your wealth, unless you manage to spend it all before leaving this world, there will be something to leave behind.
What happens when people die without a will or trust? Often the answer is probate, and even if they do have those documents, they will not avoid probate unless they are properly done.
So just what is probate? The short answer is that probate refers to a legal process in which a court determines the distribution of a person’s assets after they die. Every state has its own probate law that determine just how this will be done.
Why is Probate So Confusing?
Probate is a very confusing subject for most folks because the specifics are largely unknown except to the courts and lawyers. It doesn’t help that most people avoid thinking about anything related to death whether funeral arrangements, wills, or probate.
Every state also has slightly (and sometimes more than slightly) different probate law. For example, in the absence of a will probate law in some states leave everything to a surviving spouse while in other states it divides everything between spouse and children, even if the family home must be sold to do so.
What Are the Basic Facts about Probate?
With the caveat that individual states will have these differences, generally speaking the following description should apply in most cases.
The first thing to know about probate has to do with what it covers. A lot of the confusion about probate revolves around this critical point. Probate only covers property solely held in the name of the deceased.
That is one reason so many people die without probate being involved. Some people use revocable living trusts which remove all designated property from their name. A home may be held as joint tenants with right of survivorship, in which case it would not fall under probate. Financial accounts of many kinds may have POD (payable on death) or TOD transfer on death arrangements. None of these are subject to probate.
APPLICATION:
Because very few people have any idea of the probate laws in their state, people who die without appropriate planning often dramatically affect their heirs in ways they would not intend.
For example, one of the most frequent is in a state where in the case of probate without a will the spouse inherits everything. This is a common practice found in many states.
If there has been a late marriage by an elderly person without a will, that person may die after a short time and probate law will completely disinherit his/her children and grandchildren in favor of the new spouse.
How to Avoid Probate
Most people, especially those with smaller and less complicated estates, can easily arrange all their affairs to avoid probate. Many people now do that with the revocable living trust, but it is not impossible to find even that unnecessary. In addition to a simple will, by using joint ownership, POD’s and TOD’s, for example, it is possible to see that there are no properties remaining in an individual’s name after death.
In addition, when the total value of property held in a deceased person’s name is relatively small there are usually provisions for a family member to handle much of the paperwork saving them some of the legal expenses, especially for spouses.
When probate is required the court will appoint an executor to administer the case. This is often designated in a will.
Why So Many Cases Go to Probate
Of course the most common reason cases end up in probate court is that the individual who dies has taken no action to avoid probate.. Don’t let that person be you!
It is not uncommon for an individual to hold bank accounts or other assets in their own name alone and not take the necessary steps to arrange for their transfer upon death. When this happens there is no way for the spouse or others to claim them without going through probate.
In addition, some people prefer probate to occur to assure their wishes are carried out as intended and expressed in a will. This is especially true when there may be disagreements among family members.
If you expect probate it is a good idea to designate the person you wish to serve as administrator in a will. They will still be accountable to the court but will better be able to know and carry out your wishes.
Learn More about Probate
Probate is different in each state, but here is a way to find the information you need. Use the advanced features in Google. Search for “.gov:probate your-state” Leave off the quote marks and substitute your state name for “your-state.” This will give you information from government sites only in your state. (Notice that there is no space after the .gov: and the first search term.)
An excellent site where you can learn a lot about probate is nolo.com. Under the Living Trusts and Avoiding Probate section of this site there are numerous articles about probate including specific information about how to avoid probate for each state (except Louisiana).
Conclusion
The sad truth is that when death comes along a great deal of conflict among family members often arises. In many cases estates are not distributed in a way that would be pleasing to the deceased.
The probate process is usually not necessary in the presence of good planning. Good planning begins by becoming informed. Learn a little more about probate law in your state and take the steps necessary to avoid probate unless you have good reason to do otherwise.
