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Get the Lowdown on Probate -- And How to Avoid It


Probate is the formal legal process that gives recognition to a will and appoints the executor or personal representative who will administer the estate and distribute assets to the intended beneficiaries. Probate administration is the process of proving to a probate court that the will is genuine.

There are four steps to probate:

  1. File a petition and give notice to heirs and beneficiaries. Notice of the court hearing should be provided to all the decedent's heirs and beneficiaries.
  2. Notice must be given to creditors of the estate. They can take inventory of the estate property.
  3. All estate and funeral expenses, debts, and taxes must be paid from the estate. In some instances, the personal representative is permitted to sell estate assets to satisfy the decedent's obligations.
  4. Legal title in property is transferred according to the will or under the laws of intestacy (intestate succession laws). The petition may include an accounting of how the assets were managed during the probate process.

In many states, a properly drafted will can eliminate some of the steps otherwise required in the probate proceedings. Delay and red tape often are due to tax laws and tax filing requirements.However, a living trust -- if properly set up -- can eliminate the need for probate.Indeed, living trusts are often marketed to avoid probate when you die.

A comparison of the costs of probate and those of a living trust should be made on a case-by-case basis. Living trusts, in fact, have great value as part of estate planning, even beyond avoiding probate.

The basic job of administration and accounting for assets must be done whether the estate is handled by an executor in probate or probate is avoided because assets were transferred to a living trust or were jointly owned.

Many states have simplified or streamlined their probate processes over the years so that probate avoidance is less important than minimizing the real issues that can make probate difficult, such as lawsuits by heirs — if anyone objects to the probate petition. Many types of property routinely pass to a named beneficiary by designation rather than according to your will — real estate and bank or brokerage accounts held in joint names with right of survivorship.

What assets compose a probate estate?

  • All assets held in the decedent's name alone.
  • All assets the decedent owned with other persons — when he or she dies, that share becomes subject to probate.
  • All assets payable to the estate as the designated beneficiary, or even assets that have no designated beneficiary — insurance and employee benefits, for example.
  • Amounts owed to the decedent before death but paid after death, such as the decedent's last paycheck.
  • Household objects, jewelry — items without title.

While most assets that are subject to probate administration come under the supervision of the probate court in the location where the decedent lived at the time of death, the exception is real estate. You must probate real estate in the county that it's located in. If the estate has real estate in another jurisdiction, you must have ancillary administration — separate probate of the property in the jurisdiction where it's located — in addition to probate in the decedent's state of residence.

A properly drafted will, updated regularly to account for life changes, and organized records of debts, personal property and other assets, simplifies the probate process. The easier it is for your personal representative to trace your steps after you're gone, the easier the process. Whether you are someday expecting an inheritance or planning to leave one, you should know how probate rules affect your particular situation.

But again, you can solve a great many estate planning problems, including the avoidance of probate, by properly setting up a living trust. Give us a call, and we'll go over the details of how to set up a trust and avoid probate.



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Stephen Holladay
Stephen Holladay
Tax Practice Leader | Partner
(843) 665-5900
1411 Second Loop Road
Florence, SC 29505
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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