The term “probate” refers to the legal process that transfers assets from one person to another. In the case of large estates, it can be fairly complex. Probate may or may not be necessary, depending on whether there’s a will and the assets in question. Some people assume that whenever there’s a will, you can skip probate. Unfortunately, that’s not the case. Let’s take a closer look at when probate is not necessary.
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The Only Assets are Non-Probate Assets
If your estate only consists of non-probate assets, you’ll be able to skip a formal probate process. Non-probate assets are those that bypass the probate process and go directly to your named beneficiaries. These include:
- Assets held in joint tenancy – real estate you share with others like your spouse or siblings. These automatically transfer to the surviving tenant upon your death.
- A life insurance policy that lists someone other than the deceased or their estate as the beneficiary. Note: If the deceased or their estate is listed as the beneficiaries on any life insurance policies, it must go through the probate process.
- Property held in a trust
- Retirement accounts and investment accounts with a named beneficiary
- Any accounts with a payable on death (POD) or transfer on death (TOD) clauses with beneficiaries
The Estate is Too Small to Require Probate
Each state has a threshold for what qualifies as a small estate. In California, for instance, if your estate is valued at $150,000, it’s considered small. In Nebraska? It’s $50,000 or less. Check with an attorney to find out about that threshold in your state.
Small estates are generally eligible for a simplified probate process that doesn’t use a probate lawyer. Very large estates generally cannot avoid the full probate process.
Nobody Disputes the Will
To avoid probate court, no heirs or beneficiaries can dispute the estate. If at least one person contests the validity of the will or doesn’t agree with its terms, there’s no way to avoid the formal probate process.
The probate court will have to hold a hearing to determine if there’s a valid dispute. This delays everything until a decision is reached.
That said, there are limited reasons why someone can file a dispute. It’s not possible to file just because you don’t like what a deceased person included in their will. Creditors have the right to file against the estate If they’ve not been paid, but the executor has the right to dispute the debt.
If there aren’t any heirs, the court decides what happens, which means the estate has to go through probate before it’s distributed.
FAQs About Avoiding the Probate Process
If I want to avoid probate, what steps do I need to take?
Carefully plan things now, to make things easier in the future. First, check with your state’s estate limits – because what qualifies as “small” may actually be much larger than you’d expect.
Make your accounts payable on death. Bank accounts, securities, etc. can automatically transfer to your chosen beneficiary upon your death without probate.
From there, consider creating a living revocable trust. It’s a trust that you can charge during your lifetime – and will allow your family members and friends to inherit property without needing to go through probate. For the best result, seek legal advice from an attorney in your state.
How do state laws influence what happens if I die without a will?
If you die without a will in place, that’s known as dying intestate. Each state has its own laws, so it’s important to speak to an estate planning attorney.
The court will appoint someone to handle your estate for you. Most states will go by community property laws and the line of succession. Typically, this means your estate goes to your surviving spouse and adult children. Should you not have a spouse or adult children, it may go to your parents, then siblings, and other family members.
If I give away assets while I’m alive, does that help?
If you can reduce the size of your estate while you’re alive, it’s possible that you may be able to get it to the exempt from probate, or at least a simplified probate level. Don’t wait until your death to pass assets to your family and friends. It will reduce the amount of your estate that goes through probate, and it may also reduce or eliminate federal and state estate taxes.
Can you skip probate altogether?
Some people don’t want to go through probate. There’s nothing that requires a will or property to probate, but if the deceased owned property that’s not be specifically arranged to avoid probate, there’s no way the beneficiaries can legally own it without probate. There may be exceptions to this, depending on the state you live in. In Florida, for instance, a family can own property in the deceased’s name as long as they continue to pay taxes on it and do not sell it.
Stuck Waiting on an Inheritance to Go Through Probate Court?
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