People in estate planning circles may have mentioned the word probate to you, or perhaps someone advised you to avoid it.
Before getting into all of that and making a decision, it is critical for you to understand what probate is and is not, so you can make informed decisions about your future.
Probate is the legal process that takes place after a person dies. Also:
- It involves proving that the will of the deceased person is valid, if they have one.
- It involves the court distributing the assets of the deceased person according to the law.
- It involves paying debts or taxes the deceased person owes.
While probate often gets a bad rap for being expensive, time-consuming and public, probate is a necessary legal procedure.
Why? Because not everyone has a will, and even if someone has a will, if they do not have a trust, there is a need for a judicial body that can find out if the will is valid and real.
- The process of probate ensures that someone implements the contents of the will in reality.
- By protecting property rights, probate ensures that the rightful beneficiaries receive the deceased’s property.
- If the person who passed away owed money, probate ensures that the person’s assets are used to pay off those debts before distributing the remaining assets to the rightful individuals. The same is true for taxes.
How does probate work?
- After a person dies, someone (usually a close relative or someone named in the will) files a petition with the court for them to validate the will and start the probate process.
- Once the process begins, an individual notifies the heirs and creditors that probate is underway.
- The person in charge of distributing the assets, or an administrator appointed by the court, pays off all debts and taxes from the estate’s funds.
- The heirs receive the distribution of whatever is left according to the will or, if there is no will, according to the law.
Why should probate matter to me?
Understanding probate matters because it informs you that you must make certain choices in life as you prepare for your future.
For example, you must decide whether you want your will to go through probate and be a matter of public record or whether you prefer to establish a trust, which is an alternative that is private.
Thinking about the end of life is not a pleasant thought. Instead of the court deciding for them, everyone should proactively plan for their future to ensure that they keep control of their assets.