Just the word alone can send shivers down your spine!
Especially if you’re about to embark on your estate planning journey for the first time.
But hold on just a second…
Is probate really the big bad boogeyman we’ve been led to believe? There are a lot of “probate misconceptions” out there — so I want to clear some of those up for you in today’s blog.
First, let’s dive into the basics of how probate works.
Understanding the Basics of Probate
When it comes time to sort everything out after you’ve passed away, that’s when probate comes into play.
But what is probate?
Probate is a court process that involves the appointment of an executor or administrator to take charge of organizing your belongings, paying your debts, and making sure your property is given to the right people (as outlined in your Will) after your death.
If you don’t have a Will, the court will have to select someone (usually a family member who asks the court for permission to handle these tasks) and then state law will determine who receives your property.
If you do have a Will, your executor or administrator will be the one in charge of collecting all of your inventory and assets (such as bank accounts, real estate, personal belongings, investments and more.) This will all be appraised to determine its value.
All of your outstanding debts like your taxes, mortgage, and any other obligation, will be settled by your estate’s assets. Then the beneficiaries in your Will (or heirs, if you don’t have a Will) are notified about the probate procedures and what they are entitled to.
The probate process can look very different in other jurisdictions and states due to country or state-specific laws. But is it all bad? Here are some common misconceptions about probate that you’ll want to know.
The 5 Common Misconceptions of Probate
Misconception #1: Probate is Always Time Consuming
So how long does probate take? Honestly, it depends on your situation. Some estates can be settled within a few months. Others can take more than a year.
There are several factors in place that play a role in how long probate procedures will take. Your estate size, the complexity of it, and your local laws will influence the length of time. However, if you have a smaller estate with a straightforward Will — it can go through probate really quickly (sometimes just a matter of months.)
The number of beneficiaries you have is another factor. Whether they agree on what happens to your estate or not, will depend on how long the probate process takes.
The bottom line is that probate procedures will take under a year if:
- Your beneficiaries and personal representatives get along
- The estate isn’t taxable
- Your assets aren’t too complicated
If not though, probate procedures can take over a year or longer.
Misconception #2: Probate is Extremely Costly
It’s good to be cost conscious, but it is important to have your estate thoroughly and effectively administered. That will cost some money. Disputes and poorly kept records are usually what drives up the cost.
There will be fees for the court and your attorney, and maybe compensation for the executor. If you don’t have a plan, those costs can skyrocket. But with some expert strategic estate planning and a well-structured Will, your costs can be a lot less. Having a professional on your team who’s transparent with legal advice, will also help you to minimize (and understand) your expenses.
Misconception #3: Probate Means Losing Your Privacy
Worried about everyone knowing the details of your financial situation if your estate goes through probate? Even though probate records are generally public, they usually don’t reveal every private detail. So you can take a deep breath!
Not everyone will know about your priceless collection of antique china (unless you put it in your Will.) Most of your personal information will stay confidential — only the most essential information will be publicly available.
If you have an expert attorney work with you on creating a Will, it can help keep your sensitive information safe from the public.
Misconception #4: Everything Goes Through Probate
Another common misconception is that every single thing is going through probate when you pass away. That’s actually not true!
The assets that typically go through probate are ones with a paper title in your name — Assets such as your house, vehicle, land, investments and bank accounts (to name a few.) These are the “obvious assets.” But something like your stash of Beanie Babies from the 90s probably won’t need to go through probate.
If you have assets with designated beneficiaries, like your retirement account, bank account, and life insurance policy — they can also bypass probate and usually goes directly to your beneficiaries. The same can apply when you have joint assets. Joint assets “with a right of survivorship” become the property of the survivor. It is a good idea to have your jointly owned assets reviewed by your attorney to make sure the correct survivorship language is included.
Any assets that are owned by a living trust are generally safe from probate. This is because the trust specifies how the assets will be distributed after your death. The administrator in charge of your trust can handle the distribution on their own, without involving the court. To make sure your living trust is set up correctly, be sure to get advice from your attorney.
Misconception #5: Probate Always Requires a Will
Actually, the probate process can happen with or without a Will. Probate with a Will (also known as Testate Administration) involves going through the court to make sure the Will is authentic, and that the instructions are followed.
Probate with a Will means that there will be a designated executor (or personal representative) who is responsible for carrying out your wishes when you’ve passed away. You have control over who inherits your assets.
Probate without a Will (also known as Intestate Administration) requires the probate court to oversee the distribution of assets. The statutes governing intestate succession will determine who inherits from you.
Either way, if you have a Will or not, the goal of the probate process is to settle your affairs after your death.
Looking for Legal Advice?
Before you give probate a permanent spot in your nightmares, just remember this: not everything you’ve heard about probate is true in every situation.
It’s like that spooky old house at the end of the street… Sometimes it’s just misunderstood!
I hope this blog has helped clear some things up on the “probate boogeyman,” and make it seem less scary than it really is. Probate is really just there to protect you — (validate your Will, resolve disputes, and make sure your assets are distributed according to your wishes.)
We’ve uncovered 5 common misconceptions — but if you have any worries or questions about probate, please reach out.
At Schroeder Larsen Law, we prioritize getting to know you and your unique situation. We can help you navigate a clear path towards your peace of mind.
Click the link below to schedule an enlightening consultation today! During your consultation, we’ll figure out how to make an estate plan tailored just to you.