Whether expected or completely out of the blue, the death of a loved one can be a very traumatic experience for the entire family. Many people have difficulty learning how to move on with life without that beloved family member, much less deal with the confusing and time-consuming legal issues that arise upon the death of an individual with probate.
Probate is the legal proceedings your estate (everything you own) must go through once you pass away. Probate is always made much easier whenever you have an Estate Plan with a Will and/or a Living Trust in place that clearly defines your wishes and lays out instructions for out to administer your assets. These legal documents help by naming Beneficiaries and appointing an Executor, the person who will have the responsibility of administering your estate and carrying out your final wishes.
If you have made mindful preparation of an estate plan, you made a smart move. By creating a Will and/or Living Trust you have made a difficult life event a little bit easier on your loved ones.
What is Probate?
Probate is simply the legal process in which the probate court supervises the administration of your estate. The probate process is initiated by your Executor or a personal representative filing your death certificate along with a petition, or application, for probate.
The probate court will then authenticate your Will (if you have one). Next, the court will identify and approve your named Executor (if you have a Will) or personal representative (if you do not have a Will) as Administrator of your estate so that person can carry out all the duties associated with probate. These duties include notifying Beneficiaries and creditors, locating and assessing all assets of the estate, paying debts and taxes, and distributing the remaining amount of your estate according to the wishes you laid out in your Will, or according to state law.
Dying without a Will is called dying “intestate”, and when that happens, the probate process becomes a bit more complicated. Because there is no instrument in place that lays out your final wishes, it is up to the courts to handle proceedings and make all the decisions about your estate for you in accordance with state laws. It seems simple, but there is a lot that goes into it.
Important Probate Terms
Decedent: The person who has died and whose estate is being put through the probate process
Assets: Anything that is owned by the decedent (i.e. real estate, vehicles, life insurance policies, retirement accounts, brokerage accounts, stocks, bonds, bank accounts, any personal property or household items)
Estate: All of the decedent’s assets
Will: Legal document that outlines one’s wishes and describes how one would like to distribute their assets to their loved ones
Beneficiaries: Those who will receive the assets from the decedent’s estate. If there was a Will, the Beneficiaries will be named in the Will. If there was not a Will, the Beneficiaries will be determined according to state law.
Executor: This person is named in the decedent’s Will as the person they want to carry out their wishes and ensure all of the decedent’s assets are distributed correctly. The Executor will have to be approved by the court in the probate process and will be responsible for carrying out the entire probate process.
Administrator: The Administrator is the person the probate court appoints to carry out the process of probate
Is Probate Always Necessary?
The purpose of probate is to ensure the right Beneficiaries receive the right assets from your estate, ensure all the debts and taxes of the deceased are paid, and ensure your estate is closed out properly. Legally, even when there is a Will in place that lays out your wishes, it must go through probate. There are very few instances where it does not.
Unless you plan properly, your estate will go through probate. With that being said, the probate process is significantly simplified, and sometimes avoided altogether, when you have a solid Estate Plan in place. The more planning you do right now, the easier it will be on your loved ones after you pass away.
One way to lessen the burden of probate, or even totally avoid it, is by creating a Trust. Whatever assets you place in the name of the Trust will automatically bypass probate.
Some assets always must go through probate, but there are others that don’t.
What Assets Have to go Through Probate?
If you die intestate (without a Will), everything you own will go through the probate court. But regardless of what your Estate Plan states, the following will always go through probate:
- Any inheritance in which the Beneficiary has passed before you. If someone you have named as a Beneficiary passes away before you and you don’t update your Will, the court will get involved and decide how to settle that part of your estate. This is why it is so important to make sure your Estate Plan is always up to date.
- Property that isn’t titled (non-titled property). Anything you own that does not have paperwork is considered non-titled property. Non-titled property includes household items such as clothing, furniture, appliances, and other general household or personal items.
- Investment property owned with partners. Property that is owned with partners are typically titled as “tenants in common.” Whenever there are not any instructions in your Will for how to handle your share, the probate court will step in. Remember, if your Will clearly states your wishes, the process becomes much simpler.
- Property owned only by you (sole ownership). Any property that is titled only in your name will go through probate to determine who the property passes along to. In certain states, you can add Payable-on-Death (POD) or Transfer-on-Death (TOD) to the title or deed to avoid probate. For Oklahoma, to accomplish the passing of ownership of a piece of property while avoiding probate, you would need to complete a Transfer-on-Death (TOD) Deed. For Texas, you can complete a Lady Bird Deed, also called an Enhanced Life Estate Deed, to pass along property ownership while avoiding probate.
Assets That Avoid Probate
There are certain assets that do not have to go through probate. By planning properly, you can avoid probate for the following:
- Assets with a named Beneficiary. Whenever you name or appoint a Beneficiary on an asset, it means that asset can avoid probate. Life insurance is an example of an asset that has named Beneficiaries. So, in cases where there is a named Beneficiary on a life insurance policy, the proceeds would go directly to that person without having to go through the probate process.
- Assets placed in a Living Trust. Whenever you create and fund a Trust, you personally no longer own whatever assets you put into the Trust. Rather, the Trust owns them. So, whenever you pass, any assets that are in the name of the Trust can be distributed directly to the Beneficiaries according to the instructions you laid out thereby skipping probate.
- Assets you place as Payable-on-Death (POD) or Transfer-on-Death (TOD). Property and assets that are titled as POD or TOD can often bypass probate and pay or directly transfer ownership to your named Beneficiaries without involving probate. This can be done with items such as bank accounts, retirement accounts, brokerage accounts, stocks, vehicles, and real estate.
- Property that is titled jointly (with Survivor’s Rights). Property that is titled in this automatically goes to the survivor upon your death. There is no need for probate in this scenario.
The Probate Process
How the probate process plays out in the probate court depends on whether you have a Will. When no Will is present, the court appoints someone as a Personal representative to oversee and administer your estate. It is only the beginning of the process that differs. Once the court has appointed a Personal representative, the rest of the process is the same.
Step 1: Death Certificate and Application/Petition for Probate
Someone, often your Executor or attorney, will inform the court of your passing and submit a copy of your death certificate to initiate the probate process
Step 2: Determine Validity of Will
The court will authenticate your Will to ensure it is not forged and that it was properly signed and dated in accordance with the law. Once this is completed, your Will is considered valid.
Step 3: Appoint Executor or personal representative as Administrator
In the presence of a Will, the judge will formally appoint the Executor as such, who will then carry out the process and settle your estate. In the absence of a Will, the court will appoint a personal representative, usually your next of kin. This person then carries out the probate process the same as the Executor would.
Step 4: Post a Bond
Usually, the Administrator is required to post a bond, which is done to ensure the Administrator does not mismanage the estate and carries out its affairs.
Some states will waive the bond if your Administrator is also a Beneficiary in your estate. Additionally, you can include a request to waive a probate bond in your Will. Probate bonds can vary widely in terms of cost depending on the amount of coverage that is required.
Step 5: Inform Beneficiaries and Creditors
This step involves identifying and informing all potential Beneficiaries and potential creditors of your death and passing. Additionally, the Administrator must also settle all of your debts with creditors using money from your estate.
In cases where there is a Will in place, usually all, or at least most Beneficiaries are named, so identifying and informing them is a simple and easy task. However, finding the creditors can be a bit more difficult and time-consuming whether there is a Will present or not. It follows then that each of these tasks become significantly more difficult when there is no Will.
Step 6: Collect and Value All Assets
To determine the value of an estate, there must be an inventory and assessment made of that estate’s assets, accounting for everything that is owned at the time of passing. Sometimes, for larger estates, an appraiser may be needed who understands the process of inventorying all real assets, personal and household items to assess their value fully and fairly, which totaled together is the value of the estate.
Step 7: Pay All Fees, Debts, and Taxes
Your estate will fund your funeral expenses, any remaining medical expenses, expenses for filing for and paying taxes, and handling any other unpaid debts you owe at the time of your passing. This step is very important to be complete with detail and thoroughness because debtors could eventually go after Beneficiaries for the decedent’s debts.
Step 8: Distribute the Remaining Assets
After all the above steps have been completed and all debts have been paid, the remaining assets are forwarded and distributed to the appropriate Beneficiaries. The Administrator will transfer all deeds and titles into the correct Beneficiary’s names, according to the instructions left in the Will or according to the direction of the court.
The probate process can be a long, drawn out, and complicated process, especially during a time of loss and grief. If this is something you do not want to go through alone, consider getting help from a Wichita Falls probate attorney. We offer the support and guidance you need to simplify the probate process and allow you the time you need to grieve.
How to Avoid Probate
There are certain tools and methods to avoid the burden or probate and limit the headaches that your loved ones are subject to after your passing. There are many benefits to avoiding probate including avoiding stress, saving time, saving money, and maintaining privacy.
In the absence of a Will, probate can take a very long time (in some cases years). While the cost of probate can vary, probate generally means Executor fees, administrative costs and legal fees. And of course, the longer a probate drags on, the more fees there will be associated with it. One of the biggest reasons people seek to avoid probate is for privacy purposes. Probate proceedings are public, but by creating a Trust, you can maintain your privacy and keep the distribution of assets completely private.
There are several approaches you can take to lessen the burden and stress of probate for your loved ones, including each of the following:
- Create a Living Trust
Whenever you create a fund a Trust, you are making the Trust the owner of your assets instead of yourself. Therefore, when you pass away, the named Trustee automatically takes over management of those assets, per your instructions and guidance as laid out in the Trust.
- Gift assets to loved ones while you are still alive
By giving assets to loved ones while you are still alive, you are reducing the value of your estate, which can greatly simplify the probate process. This can also potentially have positive tax advantages.
- Maintain a small estate
Most states have a limit that will allow for a quicker and easier probate process if the estate is very small, and the totaled assets are not above a certain amount.
- Title assets as Payable-on-Death (POD) or Transfer-on-Death (TOD)
As mentioned before, this method can work for bank accounts, retirement accounts, brokerage accounts, stocks, vehicles, and real estate and some other assets.
- Title real property jointly
Property that is owned jointly means it can be transferred from one person to another without having to go through probate.
Contact a Wichita Falls Probate Attorney
If you have experienced the loss of a loved one and need some direction, we are here to help. We can make sure everything is taken care of and lift the burden off of you and your family.
If you are needing to probate a loved one's estate and are feeling lost and overwhelmed, we are here to help you with this process. Contact a Wichita Falls probate attorney today at (940) 569-4000 or fill out our contact form for a free consultation.