The word “probate” might sound intimidating, but understanding it is vital to effective estate planning. When a loved one passes away, their assets might need to undergo a court-supervised process known as probate. This guide will demystify what probate is and detail the types of assets that undergo this process.
What Exactly is Probate?
Probate is the legal procedure by which a deceased person’s assets are identified, evaluated, and distributed to their rightful heirs. This process also involves settling debts and taxes. Probate can be time-consuming and costly, making it vital to know which assets will be subject to it.
Key Types of Probate Assets
1.) Solely Owned Assets: These include any assets held in the deceased’s name alone, such as bank accounts, stocks, bonds, vehicles, and real estate. Personal items like artwork and electronics also fall under this category.
2.) Tenants-In-Common Property: This pertains to ownership where each person owns a defined share, such as 50-50 or 80-20. It commonly applies to real estate among unmarried owners.
3.) Assets With No or Predeceased Beneficiaries: Assets like retirement accounts and life insurance policies may enter probate if there is no named beneficiary or if the beneficiary has predeceased the owner.
4.) Assets Outside of a Trust: Even with a living trust, any property not properly placed in the trust could become part of the probate estate.
5.) Household and Personal Items: Even items with minimal monetary value may need to be probated.
Certain assets are not subject to probate, including properties held with rights of survivorship, assets with named beneficiaries (such as pay-on-death bank accounts), and assets held within a living trust.
Common Probate Concerns
Is probate always necessary?
Not always. Some strategies and legal structures can help avoid probate. Consulting with an estate planning attorney can identify the best approach for your situation.
What’s the difference between probate and taxable estates?
The probate estate involves assets requiring legal processing. In contrast, the taxable estate comprises all owned assets, minus debts, subject to taxation after a specific threshold.
How do you handle probate efficiently?
Hiring an experienced estate planning or elder law attorney can significantly ease the process, ensuring that legal requirements are met and the assets are distributed appropriately. Plus, you can proactively implement a probate avoidance strategy.
Taking Control of Your Estate
Probate doesn’t have to be a daunting process. By knowing what assets are subject to it and how it operates, you can make informed decisions. Here are some actionable steps:
Plan Ahead: Consider creating a living trust or naming beneficiaries where appropriate to bypass probate.
Seek Professional Guidance: An experienced attorney can help tailor an estate plan to your unique situation, potentially saving time and money in the future.
Understand Your Assets: Knowledge of what assets are subject to probate will allow for more effective planning.
Your Pathway to Peace of Mind
Probate is a critical aspect of estate management that often gets overlooked. But with thoughtful planning and professional guidance, it need not be a burdensome process. And as we have suggested, you can avoid it altogether and gain other benefits if you use a living trust as your estate plan centerpiece.
At our firm, we specialize in guiding individuals and families through the estate planning. We understand that each situation is unique and personalized attention is important. S.J. Khalsa is committed to helping you navigate these waters with confidence, compassion, and expertise.
If you are ready to learn more about navigating probate, attend our on-demand webinar. You will learn a lot if you absorb the information that it shares, and this will put you in a good position to request a consultation appointment at our Manhattan, NY estate planning office.
To get your copy, visit our webinar page and follow the simple instructions.