What Is Probate? What Should I Do about It?

Probate, Qualification, and Estate Administration

Probate, technically, is the process by which a will is accepted as valid by a court (or the clerk of the court). The term is often used more loosely (as I will use it) to also encompass the qualification of the personal representative and the administration of the estate (the court-supervised process by which the assets are distributed).

Not All Assets Go Through Probate.

Generally, assets that an individual owns in his or her sole name and that don't have effective beneficiary designations will be subject to probate. Some assets and accounts pass according to beneficiary designations, rights of survivorship, pursuant to the terms of a trust, and in other ways outside of probate. Life insurance, retirement accounts, and real estate held in joint tenancy with right of survivorship typcially pass outside of probate.

Many People See Probate as Worth Avoiding.

Many people prefer to avoid probate. Why?

1. Probate can mean more time before your beneficiaries get your assets.

2. Probate can be costly. The exact cost depends on factors such as where you are, how big your estate is, and how much your lawyer charges, and how much of the work your personal representative can do him or herself.

3. Probate makes wills public. For many people, the possibility of someone taking the time and effort to obtain a copy of the will is remote and not trouble. To others, the idea is upsetting.

4. If you have real estate located in a state other than the state in which you live that is subject to probate, you may need two probate proceedings: one in the state where you live, and another in the state where the real estate is located. That second proceeding, called ancillary administration, can add cost and effort.

But Some People Prefer Not to Avoid Probate.

1. Avoiding probate also has costs. While many people can use rights of survivorship and beneficiary designations to avoid probate, these methods can leave children with unequal shares, create unhappy co-owners, and otherwise produce suboptimal outcomes. (This is a topic for another post.) Other methods of avoiding probate, like revocable trusts, have setup and administration costs, which can be substantial.

2. While some people do not wish to have their wills and the administration of their wills made part of the public record and subject to court review, others do.

3. In some states, probate is easy, cheap, and not worth avoiding (or so I’ve heard).

4. In some states, probate can better limit the rights of creditors or disgruntled beneficiaries. In some states, the statutes of limitations for making claims against or challenging a revocable trust is longer than for wills. Consequently, in those states, the beneficiaries of a person expecting a challenge to his/her estate plan may be better served by subjecting the estate to probate.

To Avoid or Not to Avoid Probate?

Whether to avoid probate and how to avoid it are personal decisions that require consideration of an individual's or family's circumstances. These are decisions best made in consultation with an attorney.