How to Navigate Probate

Summary

Rules governing probate vary from state to state, but there are some general guidelines that apply to nearly all.

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Probate is the court process of determining the rightful distribution of assets after a person’s death. Like nearly everything that happens in court, it typically involves legal filings and hearings, and can become costly. While laws vary from state to state, some key steps and guidelines apply to many situations.

At Mercer Advisors, we have estate planning strategists with experience in trusts and other estate-planning tools that can help you potentially save money in probate fees.

What does probate entail?

While each estate is unique and the laws vary depending on where you live, probate is typically a step-by-step process that begins with determining the wishes of the decedent and ends with the distribution of assets. The process can require the executor to:

  • Establish and validate any existing will
  • Identify and appraise assets
  • Settle any debts, taxes, and bills owed
  • Distribute assets to heirs according to the decedent’s will or state laws

Probate can take many months or more than a year, while complex cases can take many years. The probate court’s schedule, workload, and the specific procedures of the jurisdiction can differ from one case to the next. Also, even in the simplest cases, all debts, taxes, and expenses related to the estate may have to be paid first, which includes income tax returns. The estate might also be responsible for credit card balances, medical bills, mortgage payments, and other outstanding bills. In some cases, assets might need to be sold to cover expenses, which can delay the process further.

What is an executor?

An executor, sometimes known as a personal representative, is an important part of probate. They’re the individual responsible for starting the process and ensuring that assets are distributed to beneficiaries as intended by the will (if one exists). If one is not named or the named executor fails to initiate probate, then, in some instances, any party with an interest in the estate, such as an heir or creditor, can begin the process.

How does probate vary from one state to the next?

The Uniform Probate Code (UPC) governs inheritance of estates in the United States. Although the UPC was intended to provide a framework across the entire U.S., only 15 states adopted it in its entirety (Alaska, Arizona, Colorado, Hawaii, Idaho, Maine, Michigan, Minnesota, Montana, Nebraska, New Mexico, North Dakota, South Carolina, South Dakota, and Utah). Even where it’s been adopted, there can be variations from state to state.

Some states also offer a simpler process for smaller estates, which can be defined as those with total asset values of less than $100,000, for example. But, again, the amount can vary depending on state law. Further, some states also allow certain estates to skip probate entirely. In Texas, for example, the Small Estate Affidavit allows for the transfer of property or assets from estates worth less than $75,000 without probate.1 A formal or traditional probate is the most common, other types of probate include:

  • Summary: Often the fastest and least expensive, it’s sometimes available for smaller estates that don’t exceed a certain value.
  • Ancillary: If required, it typically involves property owned in a state other than the decedent’s primary residence.
  • Joint: Sometimes used when spouses pass away in close succession.
  • Unsupervised: If allowed by state law, an executor or other personal representative manages the process without constant court supervision. This may be available in an uncontested and straightforward case.

In addition to rules for a simplified probate or exemption from the process, states can differ in other ways as well:

  • Costs and fees
  • Timeframes or deadlines for filing or completing the process
  • Types of assets considered for calculating the estate’s value
  • Procedures for filing disputes
  • Requirements for notifying creditors

How much does probate cost?

Several factors will determine the cost of probate, and the total expenses could amount to a significant portion of the estate’s value. The size of the estate, the state where the proceedings occur, and the estate’s complexity can all come into play. Attorney fees can vary depending on the state, with some states like California allowing attorneys to charge a fixed percentage of the estate. Other times, attorneys may bill hourly or a flat rate. Fees to the court and the executor also apply to probate cases. Appraisal costs, travel expenses, accounting fees, and other administrative costs should be factored in as well.

How can I avoid probate?

Depending on your state of residence, completely avoiding probate may not be feasible. Estate planning tools may help to avoid probate or lessen the size of your estate that is subject to probate. You may be able to avoid having your estate go through probate by setting up a revocable living trust, as opposed to utilizing a will. Although the probate process is typically time-consuming, costly, and emotionally draining for grieving heirs, strategic planning can make the process go smoothly and allow for achieving the intended outcome.

Since laws vary from state to state and can change, consulting with estate and legal professionals is recommended, especially for larger and more complex estates.

1 Texas Access to Justice Commission

 

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All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. The information is believed to be accurate, but is not guaranteed or warranted by Mercer Advisors. Content, research, tools, and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. For financial planning advice specific to your circumstances, talk to a qualified professional at Mercer Advisors.

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