Many people wish to avoid probate – the process of gathering a decedent’s assets, paying his debts, and distributing the remaining assets to his beneficiaries or heirs – because it can be complicated, expensive and time-consuming. However, probate isn’t always this way, and some estates qualify for simplified probate proceedings or don’t have to be probated at all.
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When a person dies, many of his debts and assets become his “estate.” The only items exempt from the estate are items that pass directly to named beneficiaries, such as life insurance and jointly owned real estate. State laws govern the probate process through which the decedent’s estate must go. Generally, probate is a court-supervised process.
Since the formal probate process can be unnecessarily difficult for small, simple estates, many states have informal probate options. Some states allow small estates to be administered without much court supervision, but each state has its own standards for what qualifies as a small estate. For example, Washington defines a small estate as one with a value of $100,000 or less. If an estate qualifies, it can be distributed by an affidavit rather than by court process.
If the estate must be formally probated or if the state’s informal probate process involves the court, the probate case begins when an interested party submits a petition or application to the appropriate court. If the decedent left a will, the will must accompany the application, and the court determines whether the will is valid. The court will appoint a person to administer the estate, usually called an executor or personal representative.
Some estate planning tools may help you avoid probate. For example, you can establish a trust to hold your assets; when you die, the property held in the trust can pass automatically to the named beneficiary. Additionally, you can name beneficiaries on many retirement and investment accounts, thereby keeping the assets out of your probate estate. Most banks offer a payable-on-death bank account which can also pass directly to a named beneficiary without going through probate.