Posted by Dana Law Group on August 13, 2022
Probate is the legal process through which a person’s estate is administered after their death. The estate is typically composed of the decedent’s assets and liabilities, which are used to settle any outstanding debts and taxes. The probate process can be either formal or informal, depending on the state in which it is taking place.
Most people don’t really think about probate during their lifetime. That’s a mistake. There are significant legal and tax consequences, depending on whether you find yourself in formal or informal probate. It’s also highly state-specific.
Informal probate is the simplest and quickest type of probate. It’s typically used when the decedent left a will that names an executor, and when all interested parties agree on the distribution of the estate.
The executor named in the will is responsible for filing any necessary paperwork with the court and collecting the decedent’s assets. The executor will then use those assets to pay any outstanding debts and taxes. Once that’s done, the executor can distribute the remaining assets to the beneficiaries named in the will.
Informal probate is typically used when the estate is small and there are no disputed claims against it.
Formal probate is a more complex and time-consuming process. It’s typically used when the decedent left no will, or when there is disagreement among the interested parties about the distribution of the estate.
In formal probate, the court appoints an administrator to oversee the process. The administrator is responsible for filing any necessary paperwork with the court and collecting the decedent’s assets. The administrator will then use those assets to pay any outstanding debts and taxes. Once that’s done, the administrator can distribute the remaining assets to the beneficiaries named in the will (if there is one) or according to state law (if there is no will).
You can largely avoid the process of probate, which also reduces the taxation your beneficiaries will be exposed to. The best way to avoid probate is to plan ahead. You can do this by creating a revocable living trust and transferring your assets into it. Once you’ve done that, you can name a successor trustee to take over in the event of your death or incapacity.
Like most law, probate is fact-specific. In probate, it really depends on what your assets are and your situation is. You need to understand what you own and how it’s titled, along with your debts and liabilities, to make the best decisions for you and your family.
If you have any questions about probate, or if you want to start planning for your own death or incapacity, please contact us today. It’s always better to be prepared.