When people hear the word probate, visions of drawn out, expensive court proceedings often come to mind. However, this really is not the typical case. Probate is often a simple procedure, taking six months or less, in which a judge ultimately gives legal permission for the assets of the deceased to be distributed among the beneficiaries. Alternatively, some states offer a simplified probate or summary procedure for smaller estates. The definition of a smaller estate varies, depending on the state in which you reside. A simplified probate or summary procedure differs from state to state, but typically, there is less court involvement and fewer legal requirements for wills dealing with small estates. Whether probate is required depends on the type of property involved, how the property is owned (solely or jointly), and the laws of the particular state in which you reside.
When Probate is Not Necessary
Most states provide an abbreviated probate procedure for small estates worth less than a set amount. The set amount is determined by each state, so you will need to check into the requirements of your state to determine if your estate qualifies. In these cases, the beneficiaries may be able to claim their inheritance with a court-approved affidavit, which they take to the bank or another institution to claim the property.
Quite often, property is owned jointly between spouses or between parents and their children. Property that is jointly owned with a right of survivorship clause automatically passes on to the surviving owner or owners, without going through probate.
Some assets, including life insurance policies and retirement accounts such as annuities, 401(k)s, and IRAs are considered payable on death. This means that these assets automatically pass on to the beneficiaries when the individual owning the policy or account passes away. Again, probate is not necessary.
Many individuals put their assets into a revocable living trust in order to bypass the probate process. Trusts are designed to ensure that assets are used in a manner deemed appropriate by the individual setting up the trust. Assets placed in a trust are managed by a trustee who determines how to invest the assets and who will receive the assets when the owner of said assets passes away. The term revocable simply means that the trust can be changed by the owner (or grantor) at any point in time. Trusts are a common estate-planning tool, especially for those with larger estates, used to reduce taxes and avoid probate.
When Probate is Necessary
There are several common reasons why probate may be necessary:
- If the deceased did not have a will, then probate is necessary.
- If the deceased did have a will, probate is still necessary, unless the estate is valued less than the amount set by the state, as discussed above.
- A will may be fraught with a variety of problems, including being drafted when the individual was not of sound mind, being executed fraudulently, or other challenges regarding the integrity of the will. In order to resolve these issues, the will must go through probate.
- If the deceased was the sole owner of the assets listed in the will, it must go to probate before those assets can be transferred to any beneficiaries.
- If the will does not list any beneficiaries, or if the listed beneficiaries have previously passed away, then the will must also go to probate. This would include any life insurance policies, 401(k) accounts, IRAs, or any other savings or retirement accounts that do not name beneficiaries, or the beneficiaries named passed away at an earlier date.
Therefore, no, not all wills have to go through the probate process. The laws surrounding probate vary from state to state, so the best thing for you to do is to check with the laws of your particular state to find out the proper procedure for dealing with the will of your loved one.