In a legal sense, “probate” is the process whereby a deceased person’s last will and testament, along with a probate petition and supporting documents, is submitted to the local Surrogate’s Court by the proponent/petitioner asking the Surrogate’s Court to declare that the last will and testament offered for probate is, in fact, both the most recent last will and testament of the deceased person and legally valid. Technically speaking, the probate process is complete after the Surrogate’s Court issues a decree allowing the last will and testament to be probated and appoints an executor to carry out the deceased person’s wishes as expressed in the will. Though probate is complete at this point, and the tasks associated with proper estate administration become the main duties after appointment of an executor, most clients consider the probate process to include identifying and liquidating the deceased person’s assets, establishing an estate bank account, negotiating with creditors and, finally, distributing estate assets, as provided for in the last will and testament, to be part and parcel of the probate process. Also, while not correct in a legal sense, many clients tend to think that the probate process also involves petitioning the court to have an administrator appointed for the estate of a deceased person who died without a will and the subsequent estate administration tasks outlined above, such a liquidating the deceased persons’ assets, etc. So when most clients say they want to “avoid probate” they are typically seeking to avoid all the tasks outlined above.
While there are many benefits to avoiding probate, such as the ability to prevent someone from contesting the validity of the last will and testament and the ability to avoid the legal fees associated with the probate process, persons receiving assets from the deceased person must still take certain steps to receive their inheritance and must still be wary of possible lawsuits from people who did not receive assets from the deceased person.
There are a few main ways to avoid probate. The first involves naming a joint owner on the account/property, which will cause the account/property to pass to the joint owner who outlives the other joint owner. A second way to avoid probate is to name a beneficiary on an account/property, such as a transfer of death (“TOD”) beneficiary, a pay on death (“POD”) beneficiary, or an in trust for (“ITF”) beneficiary. While the effect of having a joint owner on an account/property may achieve the same result as having a beneficiary named on an account/property, there is one very big difference between the two: if an account/property is joint, both joint owners have immediate access to the account and both can dispose of it immediately, usually without the consent of the other joint owner. When a beneficiary is named, the beneficiary does not have any power to dispose of the account/property and has no immediate access to the account/property until the original owner dies. Note that there are also some significant tax differences between joint ownership and a beneficiary designation, but for the sake of simplicity, the respective tax treatments of each type of account/property ownership is not discussed on this page.
The third most common way to avoid probate is to transfer assets into an appropriate trust to meet not only the goal of avoiding probate, but to achieve other important estate planning goals as well. For more information on the benefits of appropriate trust planning, click here.
While avoiding probate may ease some of the headaches that come when a loved one passes away, it is not a fail-poof plan. If you are either interested in learning more about the most appropriate way to avoid probate or if a loved one has passed away and you have questions about the particulars of his/her estate, please do not hesitate to contact our office.