If a revocable living trust is used as a part of an estate plan, the key to probate avoidance is ensuring that the living trust is "funded" during the lifetime of the person establishing the trust. After executing a trust agreement, the settlor should ensure that all assets are properly re-registered in the name of the living trust. If assets (especially higher value assets and real estate) remain outside of a trust, then a probate proceeding may be necessary to transfer the asset to the trust upon the death of the testator.
As a general rule, a will has no legal effect until it is probated. A will should be probated immediately, and no one has the right to suppress it. The person with possession of a will, usually the personal representative or the decedent's attorney, must produce it. Statutes impose penalties for concealing or destroying a will or for failing to produce it within a specified time.
Whether to spend your time and effort planning to avoid probate depends on a number of factors, most notably your age, your health, and your wealth. If you're young and in good health, adopting a complex probate-avoidance plan now may mean you'll have to re-do it as your life situation changes. And if you have very little property, you might not want to spend your time planning to avoid probate because your property may qualify for your state's simplified probate procedure.
An applicant may challenge the validity of a person's will after they have died by lodging a caveat and requisite fee at the probate registry. This prevents anyone from obtaining a grant of probate for that person's estate for six months, which the applicant can shortly before that point apply to extend. A caveat is not to be used to extend the time for bringing a claim for financial provision from a person's estate, such as under the Inheritance (Provision for Family and Dependants) Act 1975. The court can order costs against an applicant using a caveat for that purpose.
Assets that could make up an individual’s estate include houses, cars, stocks, artwork, life insurance, pensions, and debt. Individuals have various reasons for planning an estate, such as preserving family wealth, providing for a surviving spouse and children, funding children's or grandchildren’s education, or leaving their legacy behind to a charitable cause.
Estate planning is the process of anticipating and arranging, during a person's life, for the management and disposal of that person's estate during the person's life, in the event the person becomes incapacitated and after death. The planning includes the bequest of assets to heirs and may include minimizing gift, estate, generation skipping transfer, and taxes. Estate planning includes planning for incapacity as well as a process of reducing or eliminating uncertainties over the administration of a probate and maximizing the value of the estate by reducing taxes and other expenses. The ultimate goal of estate planning can only be determined by the specific goals of the estate owner and may be as simple or complex as the owner's wishes and needs directs. Guardians are often designated for minor children and beneficiaries in incapacity.
Estate planning is an important part of financial planning, so it’s important to find the right attorney to prepare your will. Although most family attorneys can put together a basic will, you may want one who specializes in wills and estate planning, especially if you have a lot of assets or a dependent to take care of. You may need an attorney who has expertise in planning and executing trusts and a background in taxes. Ask how the attorney charges; some charge by the hour, others have a set fee for writing wills, and some charge a percentage of the total value of the estate. Make a list of several potential wills attorneys to interview. Make sure you make a strong personal connection with your attorney — you need to be comfortable telling him or her personal, confidential information about your life, and you need to feel that the attorney is committed to solving any problems that may arise while writing your will. Also find out how long the attorney has practiced estate law and whether he or she has handled wills similar to yours.
A party may challenge any aspect of the probate administration, such as a direct challenge to the validity of the will, known as a will contest, a challenge to the status of the person serving as personal representative, a challenge as to the identity of the heirs, and a challenge to whether the personal representative is properly administering the estate. Issues of paternity can be disputed among the potential heirs in intestate estates, especially with the advent of inexpensive DNA profiling techniques. In some situations, however, even biological heirs can be denied their inheritance rights, while non-biological heirs can be granted inheritance rights.
In most states, immediate family members may ask the court to release short-term support funds while the probate proceedings lumber on. Then, eventually, the court will grant your executor permission to pay your debts and taxes and divide the rest among the people or organizations named in your will. Finally, your property will be transferred to its new owners.
In some cases, where the person named as executor cannot administer the probate, or wishes to have someone else do so, another person is named administrator. An executor or an administrator may receive compensation for his service. Additionally, beneficiaries of an estate may be able to remove the appointed executor if he or she is not capable of properly fulfilling his or her duties.
The executor also has to pay off any taxes and debt owed by the deceased from the estate. Creditors usually have a limited amount of time from the date they were notified of the testator’s death to make claims against the estate for money owed to them. Claims that are rejected by the executor can be taken to court where a probate judge will have the final say as to whether or not the claim is valid.
In other words, probate is a process with the purpose to prevent fraud after someone’s death. It is simply a way to freeze the estate until a judge determines the will is valid, that all relevant people have been notified, the property in the estate has been identified and appraised, the creditors and all taxes have been paid, and the assets of the estate have been distributed according to the wishes of the decedent.
Probate is required if the deceased person owned real property or if his or her other assets are above the threshold amount, which is usually $50,000 for major banks and lower thresholds for other financial institutions. Assets that had been “owned jointly” (but not assets held “in common”) pass automatically to the other joint owner and do not form part of the deceased estate. Also, benefits from life insurance on the deceased paid directly to a nominee is not part of the estate, nor are trust assets held by the deceased as trustee.
Your executor must find, secure, and manage your assets during the probate process, which commonly takes a few months to a year. Depending on the contents of your will, and on the amount of your debts, the executor may have to decide whether or not to sell your real estate, securities, or other property. For example, if your will makes a number of cash bequests but your estate consists mostly of valuable artwork, your collection might have to be appraised and sold to produce cash. Or, if you have many outstanding debts, your executor might have to sell some of your property to pay them.
However, many accounts, such as bank savings, CD accounts, and individual brokerage accounts, are unnecessarily probated every day. If you hold these accounts, they can be set up—or amended—to have a transfer on death (TOD) designation, which lets beneficiaries receive assets without going through the probate process. Contact your custodian or bank to set this up on your accounts.