What is probate?

Probate is the legal process of proving a will. That means making sure the inheritance goes to the right heirs and that all the deceased's wishes are fulfilled.

Elissa

Elissa Suh

Published July 23, 2020

info
Advertising Disclosure

Probate is the legal process of proving a last will and testament, which means verifying that the will is legal and the deceased person’s intentions are carried out. Probate also occurs when there is no will and a probate court must decide how to distribute the assets of the deceased’s estate to his or her loved ones.

For small estates, probate may only take a matter of weeks or months. But the probate process for larger estates can take years. Anyone with a valid claim to any assets in the estate may contest the will or file a petition with probate court, which could drag the process out even longer.

Contrary to popular belief, wills don’t necessarily help you avoid probate. But the terms of your will guide probate, which can make the process easier for everyone involved.

Many assets don’t go through probate. Bank accounts, retirement funds, and life insurance policies with a payable-on-death beneficiary are transferred to the beneficiary upon the owner’s death. Assets in a trust are governed separately from probate according to the terms of the trust.

When does probate start?

When a person dies, that person’s assets become part of his or her estate, unless those assets are co-owned by someone else, such as a spouse. How those assets are distributed to the decedent’s loved ones is a major part of probate.

If the decedent left a will, then it goes before a probate judge who determines its legality. The will directs probate, but its terms can be contested. If the decedent did not leave a will, he or she is considered to have died intestate, and the court will determine the rightful heirs of the decedent’s estate. This decision can also be contested.

policygeniusSymbolCenter

Build a legacy for your family. Get your estate plan right.

With Policygenius, you can create a tailored will using attorney-approved tools, without the attorney price tag.

Once the will is “proved,” then its terms are executed, hence why the person assigned to administer the estate is called the executor, who acts as the personal representative of your estate. When there is no will, the person assigned by the court to manage probate is called the administrator. (A court will also assign an administrator if the intended executor declines or is unavailable.) Any fees associated with executing a will or administering an estate can be paid out of the assets in the estate.

Read more about what the executor of an estate does.

How does probate work?

There’s more to probate than just giving away the decedent’s assets. The executor or administrator must perform numerous tasks, and document each step of the process for a probate packet that contains all the relevant paperwork associated with executing an estate. These are the general steps of the probate process:

  • Getting the death certificate
  • Petitioning the court to become executor or administrator
  • Identifying assets
  • Paying debts, taxes, and other expenses
  • Notifying beneficiaries and distributing assets

Don't have a will yet? Start your estate plan with the new Policygenius app.

The executor gets the death certificate

The death certificate will need to be used to prove that the decedent is, in fact, dead. The judge may ask to see it when the executor presents the will or when someone applies to become personal administrator if the decedent had no will. The estate should have as many copies as needed because the death certificate will also be used to claim payable-on-death accounts and life insurance benefits.

Learn more about how to get a death certificate.

The executor presents the will to the judge

Probate court proves the will and allows its terms to be executed.

Most states require that the witnesses who signed a will appear before the probate court in order for the will to be proven. Many states, however, allow self-proving affidavits,, which the witnesses can sign along with the will. This affidavit substitutes for the witnesses’ personal testimony, and allow a will to be proven more quickly and easily.

When the judge has approved the executor, he or she will issue letters testamentary officially granting control of the estate to the executor.

Identifying and appraising assets

The executor or administrator is responsible for locating the assets that belong to the decedent’s estate. He or she may also need to have the property appraised, since the value of the property will probably become important later on when determining each beneficiary’s share. Any costs associated with the appraisal can come out of the estate.

Paying liabilities and debts

If any creditors are owed money from the estate, the estate must notify them of the decedent’s death within a reasonable time frame. The laws governing how and when to do this vary from state to state, and some states even allow especially small estates to skip this part altogether. The sale of the decedent’s assets can be used to repay any debts.

Ongoing lawsuits against the estate may also continue during probate, and the estate may be required to pay out any judgments.

Note that if you’re the beneficiary of the estate, you are not personally responsible for paying any of the debt or liabilities of the deceased person unless you co-signed the debt or were named in the lawsuit.

Learn more about what happens to your debt when you die.

Paying taxes

During probate, the executor or administrator is responsible for paying any taxes the decedent owed. This includes not only property tax and income tax but also, if applicable, the estate tax (on estates valued above $11.58 million, as of 2020) and state inheritance taxes.

The executor must file taxes on behalf of the decedent using the same Form 1040 that the decedent used while alive. The executor must also file income tax for previous years if the decedent failed to do so.

Paying other expenses

The executor is responsible for paying expenses like homeowners insurance premiums and utility bills.

Notifying beneficiaries

The administrator or executor must notify all beneficiaries that they are named in the will. Failure to do so can be grounds for a lawsuit from the beneficiaries to seek damages for assets they would’ve received had they been properly notified.

A last will and testament may also nominate people to become a guardian of the decedent’s minor children or even to take care of pets. The executor must notify these people as well.

Distributing assets

After any creditors, liabilities, taxes, and other expenses are paid, the executor or administrator must distribute the remaining assets to the beneficiaries. Specific bequests go to those named to receive them. The remaining assets, which are called the residue of the estate, must be divided up according to the terms of the will.

Via the executor, the beneficiaries can decide which types of property are transferred to whom, or if the property should be sold and the value distributed proportionally.

What is probate court?

Probate court is where the executor first presents the deceased’s last will and testament for the judge to verify. If there is no will, then the judge will consider the deceased intestate and select an administrator to manage the estate.

If anyone chooses to contest any part of the probate process, he or she will file the paperwork in a probate court. All contests to probate will be adjudicated in probate court. Unlike what you see in pop culture, probate court is generally pretty boring.

Most counties have their own court dedicated to probate, guardianships, and other estate matters. It may go by another name, like surrogate’s court, superior court, or even orphan’s court. Your state should have a government website indicating where the court is located.

How much does probate cost?

According to LegalMatch, the overall cost of probate can range from 2% to 7% of the entire estate value.

A good will can save your loved ones thousands of dollars in costs, including attorney’s fees and filing fees.

However, in many cases, you can expect to pay a few different costs and fees associated with probate. These costs vary by state and are sometimes spelled out in your state’s probate code.

Court filing fees

Unless your estate is valued below a certain amount, your executor will need to file probate with the county clerk. Every state sets its own filing fee, and some counties may add additional administrative fees.

Some states set a flat fee, while in others the court filing fees are based on the value of the estate, with larger estates paying higher amounts. For example, in California it costs $435 for the initial estate filing, while in New York estates valued less than $10,000 would only pay a $45 filing fee while those over $500,000 would pay $1,250. In North Carolina, there is a maximum filing fee of $6,000, no matter the size of the estate.

If more paperwork needs to be filed with the court, you can expect additional probate fees.

Attorney fees

If you sought out the services of a lawyer, then you’ll have to pay those too. Many states don’t allow attorneys to collect fees until after probate has ended. Some states allow attorneys to claim a percentage of the total estate value for their fees, but other attorneys may charge an hourly rate instead.

Learn more about how to find an estate planning attorney.

Probate bond

Also called “fiduciary bonds,” “surety bonds,” or “estate bonds,” probate bonds are meant to protect the decedent’s estate from any incompetent or malicious actions, including fraud or theft, by the executor. The executor or administrator pays a small fee for the bond, usually a percentage of the total estate value. The bond can be refunded after probate if the executor acted in good faith, minus an issuer fee.

Many states require your executor or administrator to post the bond, but it may be waived under certain circumstances, or the testator may waive it in their will.

Creditor notice fees

The state may require the executor to post a notice to creditors in a newspaper announcing your death so that the creditors can make a claim to money they’re owed. Filing the notice could cost money, which will depend on the newspaper and local law.

Executor compensation

These costs are paid to the executor for performing his or her duties. They may be outlined in the will, but your state may define a minimum amount the executor can collect.

For example, in California, the executor is entitled to receive a percentage of the estate as compensation, starting at 4% of the first $100,000, 3% of the next $100,000, 2% of the next $800,000, 1% of the next $9 million, and so on. Court-appointed administrators must also be paid a fee.

Executors who are beneficiaries sometimes choose to waive their compensation.

How long does probate take?

Probate can take as little as 30 days to several years. Larger estates have more assets to distribute and more claims to satisfy, so distributing assets could drag on for years. Legal challenges can lengthen this process.

According to a national 2018 survey, probate took on average 16 months to complete.

How can I avoid probate?

If the value of your estate is above a certain amount, your assets will have to be probated whether or not you died with a last will and testament. However, according to most state laws, your spouse has the right to claim the assets in your estate; any assets you own jointly with someone else may revert to sole ownership for the surviving owner.

Certain assets do not go through probate. They are either distributed separately or have their own rules regarding distribution. Nonprobatable assets include:

  • Assets in a trust, which are governed by the trust’s rules. Read more about the difference between a trust and a will.
  • Payable-on-death accounts, which are established when you assign a beneficiary to your checking account, savings account, or retirement accounts. Learn more about payable-on-death accounts, also called transfer-on-death accounts.
  • A life insurance death benefit, which also pays directly to a named beneficiary.

Simplified probate and summary administration

Most states have laws in place to help small estates avoid probate. Depending on the state, small estate laws might only apply when someone died intestate (without a will).

(See: Five celebrities who died without a will, and what happened to their estates)

To apply for simplified probate, the respective heirs sign an affidavit. Depending on your state, they may either have to file the affidavit with the county clerk, or with whomever has possession of the asset, such as the bank that holds the decedent’s cash. Some states require you to file the affidavit with both the court and the possessors of the asset.

If the affidavit is accepted, the named assets are transferred to the heir, which is sometimes called summary administration. Most states require you to wait a certain number of days or months before filing a summary administration or small-estates affidavit, although the length of time varies between states.

For the purpose of determining eligibility for summary or small-estate administration, every state calculates the value of an estate differently. Some states include real property or vehicles in the valuation; others do not. Many states have determined that an estate cannot be considered “small” if it contains real property.

For example, in New York, you can avoid formal probate proceedings if the decedent’s estate was worth less than $50,000 and did not include any real property. However, in California the decedent’s estate can be worth as much as $166,250 (including real estate) and still qualify for use of the small estate affidavit.

Related article: How to get a small estate affidavit

Recession-proof your money. Get the free ebook.

Get the all-new ebook from Easy Money by Policygenius: 50 money moves to make in a recession.

Policygenius Image
Personal Finance Editor

Elissa Suh

Personal Finance Editor

Elissa is a personal finance editor at Policygenius in New York City. She writes about estate planning, mortgages, and occasionally health insurance. In the past she has written about film and music.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

Was this article helpful?

thumbsUp
thumbsDown