Wednesday, May 22, 2013

Just What Is Probate?

When a loved one dies, their estate will go through a process called Probate. This happens regardless of whether they have left a Last Will and Testament or not. The purpose of Probate is to verify the Will and the Estate for disbursement to beneficiaries, collect necessary final taxes, and settle any outstanding debts. There are many pros and cons involved in Probate, and in some instances there are ways to avoid it. Here I will provide you with a very brief explanation of Probate.

Verifying and transferring assets of an estate is a long and expensive process; most take about a year before they are fully settled. Probate usually takes seven months from start to finish. This allows time for creditors to submit claims for payment of debts, which may be paid for by direct funds or by selling off items or assets to meet the necessary amount. When Probate starts, heirs and beneficiaries are notified of the will so that they may contest it if they so desire. At this time, a list of all assets is prepared for the disbursement to beneficiaries. These assets are also accounted for upon disbursement, noting whether they were received by the beneficiary or used to pay debts and other expenses.

Keep in mind that only money and other items which were owned solely by the decedent are passed through Probate. Any assets owned with a successor by contract avoid Probate and immediately go to that contractual beneficiary. For example, say Mom and Dad own a house together and both of their names are on the mortgage, title, deed, etc. When Dad died, the house does not go through Probate because Mom was the co-owner. Because of Dad's passing, Mom became the sole owner and is the one responsible for payments. This means any type of property, furniture, vehicles, money, land, artwork, or business shares that are co-owned with the decedent avoids Probate.

For some people, avoiding Probate is a high priority. Believe it or not, there are ways to keep your estate from going through Probate if you plan for it well enough with a quality Elder Law Attorney. This can be done through Revocable Living Trusts, Pay-On-Death Accounts or Registrations, or through Co-Ownership of Property(as mentioned above). Very small estates tend to avoid Probate as well, because they lack the money and assets to require the Probate process. However, I highly recommend that while planning your estate, you take the time to consult with a qualified and experienced Elder Law Attorney to review your finances and assets to make sure you make the best decision for yourself and your family.

Article Source:

No comments:

Post a Comment