Estate Administration – The Basics of Probate
What Is Probate?
Probate is a legal process in which a court oversees the administration of a decedent’s estate. The process is started by an individual, who is typically the nominated personal representative, filing a will and probate petition with a probate court, typically with the assistance of an attorney. After a court appoints the personal representative of the estate, that personal representative must take several steps before the estate is closed and assets distributed to the beneficiaries. Some major steps of probate include: dealing with gathering and protecting decedent’s assets, dealing with creditors, and filing all required tax returns. Washington offers non-intervention probate to qualifying estates, which is a probate with less court supervision and fewer court filings than a traditional probate such as in Oregon. Because of these non-intervention probates, Washington’s probate process can be more efficient than other states. Many individuals, however, do not want a probate court to be involved in the administration of their estates for various reasons.
How Long is the Probate Process?
All probates last at least 4 months, because this is the period in which creditors can make a claim against the estate, but very often probate takes longer. Waiting on financial institutions to release assets in the decedent’s name to the personal representative of the estate can take some time depending on the institution. Also, if real property needs to be sold as a part of the probate process, this can hold up the time in which the estate assets can be distributed to the beneficiaries. Complicated estates can take years in probate to sort out various issues, especially if there are disagreements among the various beneficiaries or complex tax issues to deal with.
How Much Does Probate Cost?
The cost of a probate varies greatly depending on the complexity of the estate. In Washington, attorneys represent the personal representative of the estate and charge on an hourly basis. If an estate is more complex and more time is involved, then the overall cost will be more. Larger estates do not necessarily equate to more in attorney’s fees. In fact, small estates, especially ones without a will, can be equally or even more complex than larger estates.
Does A Will Avoid Probate?
One common misconception is that a will avoids the need for probate. However, a will-based estate plan is designed to go through probate and is written to streamline the process to the extent possible. If a person dies without a will, that person dies intestate. The probates of intestate estates commonly have many issues that could have been avoided if the decedent had executed a basic will. If a person dies without a will, the beneficiaries are determined by state law, which are called the laws of intestacy. If a person dies testate (with a will) or intestate, unless proper probate avoidance planning was done ahead of time, the decedent’s estate may need to go through the probate process before the estate can be distributed to the beneficiaries. The question of whether an estate is required to go through probate depends on whether the decedent had probate property at their death, which is further discussed below.
Which Assets Are Subject To Probate?
Not all assets need to pass through probate to be distributed to beneficiaries. One of the main assets subject to probate is real property. Except for married couples in many cases, to pass title to real property to a beneficiary, that property must go through the probate process. Owning real property in multiple states can trigger a probate in each state, so the location of real property is an important consideration when deciding whether to avoid probate. Non-probate property is, unsurprisingly, property that passes outside of probate. Common non-probate assets include retirement accounts and life insurance policies, which pass based on the beneficiary designations for each. Investment accounts, cash accounts, and business interests are all examples of property that can be subject to probate.
Estate Administration – How to Avoid Probate
Should I Set Up a Living Trust to Avoid Probate?
Setting up a living trust is the most common way of avoiding probate. The nominated trustee can start the administration process without the delay of becoming appointed by a court. The trustee does much of the work that a personal representative would do in a probate, but without court supervision and the need to file various documents throughout the administration of the estate, such as an estate inventory. A trustee still must follow a trust administration process to take care of various matters involved in wrapping up an estate, such as filing all required taxes, so the assistance of an attorney is typically required. However, because the attorney does not have to prepare the various court documents required in a probate, the attorney fees are less expensive.
What Are The Downsides Of Setting Up A Living Trust?
The two biggest downsides of a trust-based plan are that (1) it is more expensive to set up than a will-based estate plan and (2) it takes more work to maintain throughout an individual’s lifetime. When setting up a trust-based plan, to properly fund the trust, the individual needs to transfer title to various assets to their trust. For example, all title to real property should be re-titled in the name of the trust, which requires drafting, signing, and recording a new deed for each property. Investment accounts, cash accounts, business interests, and other assets are also commonly transferred to the trust. This requires more documents to draft when setting up and funding the trust than would be required for setting up a will-based plan. Correspondingly, after setting up a trust-based plan, when an individual obtains a new asset, that individual needs to be mindful of how such asset is titled. Because a will-based plan does not require re-titling current or subsequently acquired assets, it is less work to set up and maintain throughout an individual’s lifetime than a trust-based plan.
Are There Other Ways of Avoiding Probate?
There are other ways to avoid probate that can be an option depending on an individual’s assets and estate planning goals. For example, sometimes using a transfer on death deed for real property, which allows it to pass outside of probate, is a good option, especially when an estate has one adult beneficiary. Similarly, financial institutions sometimes allow accounts to be registered as payable on death to an individual or multiple individuals, which allows such accounts to pass outside of probate. Additionally, titling an asset jointly with another individual avoids a probate for such asset at the death of the first joint owner. All these options can have various drawbacks, however, especially when planning for minor beneficiaries or when there are creditors and expenses of a decedent without a clear source to pay for such expenses.
Estate Planning attorneys at Navigate Law Group can help with setting up a comprehensive estate plan to efficiently accomplish each client’s unique goals, whether such goals involve avoiding probate or otherwise. If you have questions about how to get started with your estate plan, feel free to contact Navigate Law Group.
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Every legal issue is very unique. Accordingly, the information in this blog is intended as general education material and not as legal advice. If you think you may have a legal issue, you should consult an attorney.