What Is Probate?
Probate is the court-supervised legal process through which a person’s estate is
administered and distributed after they have passed away.
There are a few functions of a probate proceeding:
- It validates the deceased person’s Will, if they have one
- It appoints a person responsible for administering the estate (called a personal representative, executor, or administrator)
- It identifies and inventories the assets of an estate, and establishes and confirms valid debts, taxes due, and expenses of the decedent’s estate
- It ultimately distributes the balance of the estate’s assets to the beneficiaries or heirs
When Is Probate Required?
Generally, probate is required when a person dies owning assets solely in their
individual name, such as real property or bank and investment accounts,
without a designated beneficiary or survivorship feature.
Probate is generally not required for assets that pass outside of the estate by operation
of law. This includes jointly held property with rights of survivorship, assets funded during
lifetime to a revocable trust, life insurance proceeds and retirement accounts with a
beneficiary designation on file, and payable-on-death or transfer-on-death accounts.
Small Estate Procedures
Many states offer streamlined versions of probate that require little or no court
involvement. If the “probate” estate falls below a certain dollar value and/or
excludes real property, assets can be collected and distributed through a
small estate affidavit or summary administration process instead of formal probate.
Typical small-estate dollar thresholds vary widely by state. Some also exclude
assets like homestead property or vehicles from the calculation.
Independent vs. Supervised Administration
Some states bifurcate their formal probate procedures into two forms of administration.
Independent Administration
The personal representative manages and distributes assets with minimal court
oversight, selling property, paying claims, and making distributions without prior
court approval. Less expensive and faster; more common where available.
Supervised Administration
The personal representative must obtain court approval for most significant actions,
selling real property, paying claims, issuing final distributions. More protective,
but more time-consuming and expensive.
Some states only provide for supervised administration, while others require it for estates
with disputes among beneficiaries, concerns about the representative’s fitness to serve,
or when the will or state law requires it.
How Can I Avoid Probate?
The most common approach to avoiding probate entirely is to create a
revocable trust and fully fund it with all of the assets that would otherwise pass
through your probate estate, for example, bank accounts, investment accounts,
and real property. IRA and life insurance accounts avoid probate separately,
through beneficiary designations.
Is a Revocable Trust the Only Way to Avoid Probate?
No. You may also be able to avoid probate in a Will-based plan by naming
beneficiaries on accounts like retirement plans or life insurance, or by titling
property jointly with someone else.
However, there are two things to keep in mind:
lifetime, will pass outside your Will. It won’t follow the instructions in your Will.
a tax benefit it would otherwise get if it stayed solely in your name or your
revocable trust.
Because of these tradeoffs, if you want to avoid probate with a Will-based plan using
beneficiary designations or joint ownership, we strongly recommend talking to an attorney
first to make sure it fits your situation.
What Makes a State’s Probate Process More Cumbersome?
A state’s probate process is considered more burdensome when it has:
- High court filing fees
- Attorney and executor fees set by a fixed schedule or the estate’s total value, rather than actual time spent
- Long waiting periods for creditors to make claims, delaying distributions
- Complex or unclear local court rules and procedures
- A generally slow administration process
- Heavy court oversight of each step
Together, these factors can make probate slower and more expensive, meaning your
beneficiaries wait longer to receive their inheritance, and fees can eat into a larger
share of what’s ultimately passed on to them.
