When someone you love dies, you’re likely to feel a mix of grief, anxiety, and stress. Managing the estate of a loved one can be challenging and time-consuming. It’s not an experience most people look forward to having to deal with at some point in their lives. However, if you do not have a plan in place beforehand, it will be something you need to tackle almost immediately after the death of your loved one. Fortunately, there are ways to streamline the process so that you don’t have to go through the emotional upheaval that comes with handling these end-of-life details when you are already dealing with so many other emotions. Let’s take a closer look at what exactly probate is, why it happens and how you can avoid it by taking action today.
What is Probate?
Probate is the legal process that all estates go through when the person who has died has left behind assets that need to be distributed. The probate process is necessary to determine who owns the assets and how they should be distributed to the people who are entitled to them. This process is unique to each state and is carried out by the state court system. The process can take anywhere from six months to two years depending on where you live. Once the probate process has been completed, the executor or administrator of the estate must distribute the assets according to the will of the deceased person. This can be a costly, time-consuming process and can be avoided with proper planning.
How Does Probate Happen?
Before you can understand how probate happens, you must first understand the difference between real and personal property. Real property is land that is considered to be real estate. Personal property is everything else that is not real property. When someone dies, their real property is distributed to their heirs as soon as the title is transferred. Personal property, on the other hand, is delivered to the people who are entitled to it only after the probate process is complete. Here is a basic breakdown of how the probate process works: – If a person dies without a will or with a will that is not clear or complete, the probate process will be different since the court will distribute the assets according to state law. – The court will appoint someone to be the executor of the estate. This person is responsible for collecting the assets and paying any debts that are owed. – If the deceased person owned real estate, the executor will need to go to court to transfer the title. This process can take anywhere from 30 to 120 days. – The executor must then sell any real estate that the deceased person owned and distribute the proceeds to the people who are entitled to them. This process could take anywhere from 30 to 120 days. – The executor must complete the probate process by filing a final accounting with the court to show what happened with the assets and then distributing any remaining assets to the people who are entitled to them. This process could take anywhere from 30 to 120 days.
Why is Probate Necessary?
Probate is necessary because it ensures that honest people who are owed money get what they are due and dishonest people who are not entitled to the money are not able to get ahold of it. When a person dies, their assets are frozen until the probate process is complete. This is to make sure that the rightful owners of the assets receive them as well as to protect the people who are not entitled to the assets from receiving them. During this time, the court conducts an inventory of the assets, sells any real estate that the deceased person owned, pays any debts that are owed according to the terms of the will, and distributes the remaining assets to the people who are entitled to them.
What are the Disadvantages of Probate?
– It is expensive. The process of probate can cost thousands of dollars in legal fees. This is money that could be going to the people who are entitled to it. – It takes a long time. The probate process can take six months to two years to complete, if not longer. – It is stressful for the people who are entitled to the assets. They have no control over the process and are unable to access their money while the probate process is ongoing. – It is stressful for the person who is appointed as the executor since they are taking on a lot of responsibility. – It is stressful for the heirs since they have no control over the process and no idea how long it will take.
How to Avoid Probate with an Estate Plan?
The best way to avoid probate is to create an estate plan. An estate plan is a legal document that contains instructions for how you would like your assets to be distributed after you pass away. Here are a few tips to help you avoid probate: – Create a will. This is the first step toward avoiding probate. A will is your best bet for providing assurance to your heirs and executor that their inheritance will go smoothly. – Make sure your beneficiaries are named. This can be done by naming the people who are entitled to your assets along with the percentage of each asset they will receive in your will. – Make sure your will is valid. You can do this by hiring an estate planning attorney. – Create an advanced directive. An advanced directive is a legal document that allows you to set instructions for your medical care if you are ever unable to make your own decisions. – Review your estate plan regularly. Your circumstances and needs will likely change as you go through life. Your estate plan should change with them.
At the end of the day, the best way to avoid probate is to create an estate plan. An estate plan is a legal document that contains instructions for how you would like your assets to be distributed after you pass away. An estate plan is an essential part of any healthy financial strategy. Having an estate plan in place will allow you to rest easy knowing that your loved ones will be provided for in the event of your death.
Geisha Morris-Jacobs is an accountant with over 13 years of experience in accounting, taxes, and estate planning. She has helped dozens of clients with clearing up IRS audits and past tax debts. Geisha is also the owner of Jacobwise & Co., a boutique accounting firm that specializes in helping small businesses grow their revenue and individuals create estates to provide for their loved ones.