Probate, the legal process of settling the estate of a deceased person, proceeds in a probate court. The process often times takes a few months to a year.
If a person dies with a Will, otherwise known as testate, the executor presents the Will to the probate court. The court then determines if the Will is valid, hears any objections to the Will, orders that any creditors be paid and supervises the process to assure that property remaining is distributed in accordance with the terms and conditions of the Will.
If a person does not have a will, it is called intestate, and the law of the state determines what happens to the estate and any minor children if children are involved.
The major difference between dying testate and dying intestate is that an intestate estate is distributed to beneficiaries in accordance with the distribution plan established by state law; a testate estate (after payment of debts, taxes and costs of administration) is distributed in accordance with the instructions provided by the decedent in his/her Will.
The probate court process following a person's death includes:
- Proving in court that a deceased person's will is valid
- Identifying and inventorying the deceased person's property
- Having the property appraised Paying debts and taxes
- Distributing the remaining property as the will (or state law, if there's no will) directs
The probate court appoints a person to receive all claims against the estate, pay creditors and then distribute all remaining property in accordance with the laws of the state.
Typically, probate involves paperwork and court appearances by lawyers. The lawyers and court fees are paid from estate property, which would otherwise go to the people who inherit the deceased person's property.
Formal court-supervised probate is a costly, time-consuming process. The cost of probate is either set by state law or by practice and custom in your community. The typical cost to probate an estate is in the range of 3% to 7% of the total estate value.
The cost to establish a revocable living trust depends on the going rates where you live and the complexity of your estate. The benefits of establishing a living trust are certainly well worth it-if only to avoid the probate process.
