Probate is an administrative court proceeding that oversees the division of assets of a deceased. Most estate planning documents, including wills, go through probate. The document controls the entire probate process whereby the will’s named executor will take charge and administer everything involved in execution, such as dividing the assets, selling the house, paying the bills and debts, etc.
Though probate was created to make the process of executing a will more seamless and protected, it can be a huge nuisance considering that the process can take long. So many people are seeking ways they can avoid probate. There are estate plans, such as revocable trust, that do not require the administrative process.
However, despite conducting efforts to avoid probate, there are things that must be considered. These three things force probate. So if your goal is to avoid it, you need to be wary of these.
1. Real estate that will be owned by just one person.
Any form of real estate with only one person named as a sole owner will be subject to probate, absent other estate planning documents to the contrary. This is because if there is only one owner, the house needs to be retitled to another person through a court procedure. Absent a will or other estate planning document that tells the court to whom the house will go to, the default intestacy statutes will apply.
At the very minimum, a person should create a probate court controlling document, such as a will, that tells the court to whom the house will be given to after the death of the owner. Otherwise, another good strategy is to have joint owners so that if one owner passes, the other gets full ownership of the property without the need for probate.
2. The lack of pay on death beneficiaries for assets that exceed the State limit.
In various accounts, such as life insurance, IRAs, 401ks, and back accounts, people can name pay on death beneficiaries who will receive the assets when the owner passes away. The account owner can name any adult as pay on death beneficiaries, whether it be their adult kids, grandkids, siblings, etc. With listed pay on death beneficiaries, the accounts do not need to go through probate and the ownership will immediately be transferred to the named individuals.
However, without pay on death beneficiaries, these accounts will be subject to probate unless the assets amount to less than the State limit. As of writing, the threshold is at $75,000. If the assets in these accounts amount to more than that and there are no pay on death beneficiaries listed, the accounts will need to go through probate and be retitled by the court.
A revocable trust plan can also be named as a pay on death beneficiary. After the account owner’s death, the assets will be transferred to the revocable trust — and this is a process that doesn’t need to go through probate. This holds true for real estate, cars, and other pieces of property that are owned by the revocable trust.
3. Issues with the will and charitable distributions
It’s been established that a will can control the entire probate process. This document tells the court exactly what needs to be done. And all they, along with the executor, can do is to enforce the will. With that, these documents hold a lot of power. But to exercise that power, it must first meet legal standards.
During probate, the court will take measures to ensure that the will is legitimate and written by the deceased. Anything that can challenge the will’s validity, such as the deceased being under duress, the existence of an amendment or revocation, etc. can force and delay the probate process.
Further, charitable distributions made in a will are also not taken lightly. If a person distributes some assets to a charity or organization, the court needs to inspect the will through probate.
All of these things can force the probate process, even if a person creates an estate plan that specifically avoids probate. That’s why it’s important to consider and fix these three matters in order to ensure that probate is avoided and the assets of a deceased are distributed swiftly and with the least expense on the estate.