What is Probate?

The court process for transferring property that do not have designated beneficiaries.

What assets are subject to Probate?

All assets that are in the decedent’s name (without a designated beneficiary) at the time of death. The estate needs to go through probate if the value of the assets are more than the state limit. In Arizona, the limits is $75,000 – in California, $150,000 – in Nevada, $100,000 – in New York, $30,000.

What is the Probate process?

The process varies from state to state. There are a number of pleadings that need to be filed with the court to admit the will to probate and appoint a personal representative. If the original will cannot be found there will be a brief hearing before a judge to confirm that a search was made for the will.

Personal Representative

The court issues the Letters of Personal Representative and Acceptance that gives the personal representative authority to act for the estate.

Personal Representative Duties

The personal representative must identify and locate all of the decedent’s property. The personal representative is responsible for collecting, dividing, selling, and distributing the property. The personal representative much follow the wishes expressed in the will or the state law, if there is no will.

Specific people (close family) must be notified of the probate. A Notice to Creditors must be published in a qualified newspaper.

Tax returns may need to be prepared.

Trust vs Designating Beneficiaries

Having a trust (and putting all assets in the trust) is one way to avoid probate. The disadvantage of a trust is the cost.  They can cost more than $2,000 to set up and are costly when updates are needed.

26 states (including Arizona, California, Colorado, New Mexico and Nevada) allow transfer-on-death deeds for real estate.  Real estate would pass directly to the beneficiaries and not go through probate.  On all other accounts (IRAs, brokerage accounts, bank accounts, etc) beneficiaries can assigned to avoid probate with these accounts.

It is helpful to have some money available without beneficiaries to cover expenses, such as utilities, taxes, lawyers, funeral, etc.  It is easier to have some available than to collect from beneficiaries.

I appreciate any feedback for our AIO Financial blog. Please contact me if you have any comments, questions, and suggestions.

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