When someone passes away, their assets are required to be allocated to whomever the deceased wished to get them or whoever is entitled in accordance to state law if there was no will created. In a lot of cases, this will involve a prolonged probate process. Nevertheless, there are occasions when formal probate isn’t required. Rather, an informal process allowing the estate to be administered quickly.
Prior to the heir(s) or executor(s) of the estate deciding to forgo probate, they need to comprehend the circumstances that necessitates the formal process and which assets might need to be included. This will aid them in taking the proper steps in the allocation of the decedent’s estate.
Common Assets That Go Through Probate
If the estate is set up properly, it might not need to go through probate in spite of what assets are owned. In many cases, this involves devising a trust that would own every asset rather than the person. In addition, assets with a straightforward beneficiary might not need to go through the probate process. For example, a life insurance policy with a designated beneficiary would go immediately to that person without the requirement for probate.
Specific assets commonly do go through probate. When the deceased individual was the solitary owner of an item of property, like a vehicle or home, that asset would be required to be included in probate. The individuals name would be the solitary one on the title.
Property that is partly owned with another individual as tenants in common will be included in probate. An instance of this would be if the individual that passed away had ownership of a rental property with another individual. Their portion of the property will then be probated to establish who the owner is going to be in the future.
Items that aren’t titled might also need to go through probate depending on their value. This comprises of furniture, home appliances, household things, and personal belongings. A lot of times, the combination of the worth of these items will not be sufficient to require probate, but they would be included in the catalog of probated items when other assets exist that need to be included.
Uncommon Assets Going Through Probate
There are exceptions, and this is the situation with probate. There are some uncommon assets that might be required to be part of the probate estate. In these cases, you need to understand what to do with them.
A primary example is what would generally be a straightforward transfer of property, however the beneficiary has passed away. For instance, an individual lists one of their siblings as the beneficiary of their financial institution account as POD. That sibling passes away and the financial institution account’s owner did not change the listed beneficiary prior to their passing. Since the person listed as beneficiary isn’t alive any longer, the financial institution account will have to be included in probate.
Assets That Aren’t Required to Go Through Probate
A lot of assets aren’t required to go through probate since they can be instantly transferred to a beneficiary. Meaning that an individual has been listed on the correct documentation as the beneficiary for that asset. Some examples comprise of:
- Retirement accounts whereas a beneficiary is included
- Life insurance policies
- Pension plans
- S. savings bonds with POD forms
- S. savings bonds that are jointly owned
- Financial institution accounts with POD forms
- Securities that are POD
- Assets in a living trust
- Wages or commissions owned to the deceased
Real estate and other property can also be not included in probate if it meets specific conditions. In a number of states, real estate owned by the deceased individual can go to the individual designated on the TOD deed. Property kept in tenancy with the right of survivorship automatically goes to the second individual designated on the title. Many states allow for property owned as tenants by the totality with a spouse. Meaning that the property goes to the spouse if both individuals were owners of it.
In many states, vehicles and boats may be passed on death if the correct document was filled out. Other states permit for vehicles and boats to go straight to immediate family members. Household goods might do similar under specific state laws.
One kind of asset listed can almost totally remove the requirement for probate, which is a living trust. If the individual placed every asset in a trust, they transfer the assets to the beneficiary of the trust following the individual’s passing away. A lot of people that set up a trust will place a greater part of their assets in the trust whereas others might only place specific types of property, like real estate, into the trust.
How the Value Determines the Requirement for Probate
Another factor in which establishes the requirement for the estate to be probated is it’s value. Several states provide an alternative to formal probate for lesser estates. Each state has their own name for this more informal interpretation of probate, but it follows the same principles.
If the complete value of the estate is below a specific dollar amount, the executor may file for a straightforward probate or summary probate. A hearing is not required for this kind of probate, but it is limited to a certain dollar amount for the worth of the estate. That amount is going to differ based on the state. Many states might be as low as $20,000 whereas others, such as California, enable for estates up to $150,000 to qualify for straightforward probate.
The first step to establish if an estate qualifies is to discover the restrictions in the state. Following that, the executor is required to list all the assets and their dollar worth to present with the request to file for summary probate. Creditors are still provided time for filing a claim against the estate, but it is typically a lot shorter.
Many states permit for an affidavit in which would allow the beneficiaries to take ownership of the property. This works only if there aren’t any challenges made towards the estate. If the will is challenged or other difficulties come up, the estate would then be required to go through the typical probate process.
One important factor to think is how the value is established. You might be required to get an appraisal for specific assets to know the value at the time the owner passed away. Nevertheless, any assets that aren’t required to go through probate, like those with a named beneficiary, will not be included in the worth to establish if the estate is required to go through probate.
For instance, an individual had a home that was titled tenants in common having right of survivorship with their son. They also had financial institution accounts that were POD to their son. The person also owned several nice vehicles totaling $35,000. Only the vehicles would be required to go through probate and their worth would be all that is deemed to establish if it qualifies for a lesser estate.
Filing a Will vs. Filing for Probate
There are numerous instances where you might not be required to file a request for probate with an estate. Nevertheless, that doesn’t totally let you off the hook. You still need to file the will with the court if there is one in existence.
If you have knowledge a will is in existence and do not file it with the court when an individual passes away, you might be liable for reparations to any party that would have acquired something from the estate. This liability could be civil and unlawful.
When you fail to file probate when it’s a requirement, the assets can’t be legally transferred into the names of the heirs. This poses quite an issue, particularly when the asset is real estate or a business.
Probate can be a little perplexing from knowing if and when you are required to file to manage the duties that are entailed with a probated estate. When you are not sure of the next steps, you may speak a probate attorney guide you through the process. Working alongside legal counsel can reduce the concerns of if you are required to file based on your specific situation and the state where the estate is at.
How Much Does an Estate Have to Be Worth to Go to Probate? (2020, September 03). Retrieved December 01, 2020, from https://probateadvance.com/how-much-does-an-estate-have-to-be-worth-to-go-to-probate/
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