Probate is the court-supervised process of administering a decedent's estate, ultimately distributing the net proceeds to the rightful heirs (generally in accordance with the will, if a valid will is available).
Probate generally takes more than a year (sometimes multiple years), and involves a number of legal steps. However, certain types of assets automatically bypass probate, and most states have laws that allow qualified estates (usually small) to bypass probate entirely.
Types of Probate
There are generally 5 main variants of probate:
- None — If the estate qualifies, you may not need to go through probate at all (see Is Probate Necessary? below).
- Summary — The easiest and shortest form of probate, but usually only for small, simple estates.
- Informal — The most common form of probate, but requires that there are no disputes the court needs to resolve.
- Formal — Lengthier and more expensive, but can resolve disputes. Usually requires the assistance of a lawyer.
- Supervised — Rare and onerous; used when the court finds that an heir needs protection (for example).
Is Probate Necessary?
Probate laws and rules are determined at the state and county level; there are no federal requirements.
In most cases, if the estate contains only assets that do not require probate (see Probate Exclusions below) or the remaining estate is considered "small", then probate is not required (see Small Estate Probate for specifics by state).
Even if probate is not required, however, some people choose to go forward with an official probate process anyway (see Benefits below).
A number of asset types are generally exempt from the probate process:
- Assets with named beneficiaries, such as
- IRAs, 401Ks, and so forth
- Life insurance policies (unless the beneficiary is the estate itself)
- Funds held in Payable-On-Death (POD) account
- Securities registered in a transfer-on-death (TOD) form
- Real estate subject to a transfer-on-death (TOD) deed
- Vehicles registered in a transfer-on-death (TOD) form
- Jointly owned assets, such as
- Property held in joint tenancy with right of survivorship
- Property held in community property with right of survivorship
- US Savings bond with multiple owners
- Sundry low-value household items
- Assets held in a trust
Is a Lawyer Required?
In most cases, the decision to retain a lawyer is up to the executor: see Do I Need a Lawyer?
Two states (IA, MS) do require an attorney for probate ... unless a small estate settlement process will be used. Similarly, unless a small estate settlement process will be used, FL and TX require a lawyer to represent the executor if there are heirs other than the executor, or if there are creditors involved.
Note that even if the executor does hire a lawyer, the executor will still personally have a lot to do, and EstateExec will still be very useful in terms of tracking assets, expenses, and more.
Probate details vary significantly by state, and sometimes even by county, but there are many common elements. While it is sometimes possible to settle an estate without going through probate, many of the basic concepts are the same whether or not the court is involved:
Executor Appointment: The first step in the probate process is to get the court to formally appoint you as executor (or personal representative, or administrator, or whatever local term is used). This step requires filing documents with the court, notifying potentially interested parties, and obtaining a probate bond if required. See Becoming an Executor for details, and Probate Forms.
Estate Inventory: You will need to provide the court with an official inventory of the estate (all assets and debts). Often, an initial version of this inventory will be required along with the probate application, but this inventory can be updated later if additional information comes to light. See Taking Inventory.
In Each State: Personal property (such as a bank account or coin collection) is generally probated in the decedent's legal state of residence, but real estate is probated where the property is physically located. Certain classes of personal property, such as vehicles that are registered and titled out of state, may also need to be probated in the jurisdiction where the property is domiciled. If there are multiple real properties in a single state, you can probate them all in the same probate court, but if the decedent owned property in multiple states or internationally, you'll have to go through the settlement process in multiple locations (see Ancillary Probate).
Creditor Notification: It is best practice to notify creditors of the probate process so they know to submit claims, and many states require such notification for estates within their jurisdictions. See Finding Debts.
Family Entitlements: A surviving spouse and other dependants often have rights to the estate that can supercede the terms of a will or even legitimate claims of creditors. In some cases you are legally obligated to inform the spouse of those rights, and in you may be required to wait a certain amount of time to let the spouse decide whether to make any claims. See Family Entitlements.
Debt Resolution: Once you understand the overall financial situation of the estate, you must attempt to resolve all debts. See Resolving Debts.
Tax Payments & Discharge of Personal Liability: You are responsible for filing a tax return for the decedent's final year of life, and for the estate. It is best practice to then apply for a Discharge of Personal Liability (IRS Form 5495) before distributing assets to heirs. See Paying Taxes.
Asset Distribution: Once you have resolved all debts and paid any taxes due, you can distribute the remaining assets to the rightful heirs. See Making Distributions.
Final Accounting & Probate Closing: In general, the probate process concludes with submission and court approval of a "Final Accounting" and a "Probate Closing Statement".
It can sometimes be difficult to determine which court to use for a given estate. The particular type of court that oversees the probate process varies by state: it may be a dedicated probate court, a circuit court, a superior court, a general county court, or something else. If you are using EstateExec, Tasks: Start probate (see sample) will help you find the appropriate court for your estate.
As noted above, remember that real property must be probated in the state in which it is physically located, so you may need to go through probate in multiple states.
It will likely only cost a few hundred dollars for probate court costs ... and thousands of dollars to pay lawyers, appraisers, and possibly a tax accountant. The average estate spends $12,400 on lawyers and accountants (see General Statistics), and since lawyers and accountants typically charge by the hour, having your information well-organized via EstateExec will likely pay for the EstateExec licensing fee many times over.
If probate is required, one clear benefit of probate is that you will be following the law. However, even if probate is not required, it can help shield you from potentially unhappy heirs, and it will also get you a document commonly known as your "Letters" (sometimes known as Letters of Authority, Letters of Administration, Letters Testamentary, etc.), which will make it easier for you to prove your authority when dealing with third parties such as banks.
EstateExec has arranged for experienced attorneys to file probate cases for EstateExec customers in select locations; availability and cost depend on location of the estate. See Probate Service for details on this optional service; you are also welcome to use your own attorney, or none at all.
Alternative to Probate
If the estate is not required to go through probate, and you decide not to bother with it, you won't get your "Letters" as described above. Instead, many states will allow you to claim assets using a simple sworn statement ("affidavit") that the decedent has passed away, you are the executor of the estate, and are taking possession of the asset. In many cases, you will have to provide a copy of the death certificate as well.
If the decedent died intestate (i.e., without a will), you will likely have to use an Affidavit of Heirship, which is a document stating the location and date of the decedent's death, and the name and address of all heirs specified by statute.
See Small Estate Alternatives to Probate for state-specific details.