An Introduction to Estate Probate

Estate probate is a process to disseminate the property of a deceased individual. Probate is a long and expensive process that occurs between the court in your state and the executor of your will. Typically, the executor is a lawyer or adviser you have named in your will. The executor will carry out all functions of the probate as necessary.

Functions of a Probate

There are four major tasks an executor must follow through on in order to successfully close a probate:

  • Identification of all property--The executor must list all property in your entire estate, including retirement accounts, investments, real estate, jewelry and personal assets. The list of your property can be exhaustive, and the executor must prove that each of the items exists and was legally yours at the time of your death.
  • Appraisal and payment of owed debts--The value of each piece of property must be determined through an appraisal process. During this process, it may become clear there are remaining debts to either private lenders or tax collectors. In this case, the executor will pay those debts out of funds in the estate. If no funds are available, payment will be made by selling the asset.
  • Proof of valid will--The executor must furnish the will and ensure the will is legal in the state. If you have a will, it must meet the legal requirements of the state in which you live and own property. Only if the legal guidelines are met can the will be executed as written.
  • Distribution of assets--Once the process of validating the assets, paying debts and determining where the assets are to go takes place, the executor begins distributing the assets as requested in the will.

Downsides of Probate

Though often necessary, probate is very costly. Fees to the executor of the will, typically an attorney, can run up to 5 percent of the entire estate. Further, the time spent in court results in court fees. Since courts are usually slow to process probate, this can take several years. Any items listed during a probate are of public record. Today, this means they are accessible through the Internet. Interested parties can find out all they need to know about the value of the estate you left behind, all your remaining debts and how you settled your will. Many individuals, particularly public figures, want to avoid this scenario.

Avoiding Probate

The key to avoiding probate is proper planning. Consider setting up a living trust. A trust is similar to a legal entity, or business, that will own all of your assets. Therefore, when you die, you do not have any assets to enter into probate. In addition to a trust, you should list heirs on all documents pertaining to your investments. For example, the heirs you list on your 401k account will begin receiving withdrawals automatically upon your death. Finally, you can gift portions of your assets away while you are still alive in order to avoid giving them away after death. Ask your estate lawyer about taxes on large gifts to assure you are making a wise financial decision.

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