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Is Probate Necessary for All Wills?

Estate Planning
Senior woman leaning on a fence, looking out over a field and wondering is probate necessary

Probate is a very common legal procedure, and it's required for some assets to formally transfer from their deceased owner to his or her beneficiaries. But it can be a time-consuming and expensive process. In some cases, there's no question about who should receive assets, leaving survivors to wonder: Is probate necessary? If you wonder what probate is and when it may be avoidable, here's what to consider when estate planning.

What Is Probate & When Is It Necessary?

Probate is a legal proceeding to help ensure assets are handled properly after death. While there is no requirement for property or a will to go through probate, in some cases, it may be the only way to legally obtain ownership of certain assets.

During probate, a personal representative and local courts review the decedent's will to determine if the document is valid. They also account for assets in the estate and provide an opportunity for creditors to collect on any unpaid obligations. If any assets remain, the personal representative identifies beneficiaries and distributes assets according to the will's instructions and court's approval.

In some cases, such as when there is no will, the probate process can happen so state law can dictate how the personal representative handles assets.

When Is Probate Avoidable?

There are several situations when assets may not have to go through the probate process. However, while probate may be avoidable, there is likely still a process or paperwork that's required in order to complete the transfer of the funds to the beneficiary. This isn't an all-inclusive list, but here are some examples of exceptions and what can happen if a will is not probated.

Designated Beneficiary

Assets that are properly designated to a beneficiary often bypass probate. For example, selecting a spouse as a beneficiary for an individual retirement account (IRA) or 401(k) plan generally results in the account moving to the recipient without probate. The same is typically true for life insurance proceeds when a beneficiary, whether it's a spouse or not, has been named.

Joint Property

When two or more people own property, it's possible for assets to pass to the remaining owners without probate. For example, a couple might have a bank account together or own a home as joint tenants with rights of survivorship. When one of the owners passes away, their ownership interest may automatically transfer to the remaining owner. That process is known as transferring by "operation of law." Other forms of shared ownership might work similarly, and state laws may also dictate what happens to property when someone dies.

Payable on Death

When opening financial accounts, account owners may be able to provide instructions regarding what to do when they die. For example, you may be able to add payable on death (POD) or transfer on death (TOD) instructions to your bank or brokerage accounts. When doing so, you name one or more recipients who take ownership of these assets when you die.

Assets in a Trust

Assets held in a trust may avoid the probate process. Trusts can serve a variety of purposes, including facilitating the transfer of assets after death without probate. When placing assets in a trust, the trustee becomes the owner — the person who previously owned the assets gives up ownership. As a result, when that person dies, the trust may avoid probate.

Small Estates

Even if somebody dies with assets in their own name, probate might be unnecessary if the assets are not substantial. In California, for example, probate is avoidable when assets are below $184,500, and the threshold is $50,000 for Virginia. The deceased's probate assets could end up below those limits because some of their assets bypass probate (as a result of trust accounts, beneficiary designations or other factors).

Is Probate Necessary for Your Family?

Several factors determine whether or not probate is required when somebody dies with assets. As you start estate planning, consider speaking with a legal expert to find out more about what probate is and what the specific laws in your state are.

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Information provided is general and educational in nature, and all products or services discussed may not be provided by Western & Southern Financial Group or its member companies (“the Company”). The information is not intended to be, and should not be construed as, legal or tax advice. The Company does not provide legal or tax advice. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Federal and state laws and regulations are complex and are subject to change. The Company makes no warranties with regard to the information or results obtained by its use. The Company disclaims any liability arising out of your use of, or reliance on, the information. Consult an attorney or tax advisor regarding your specific legal or tax situation.