5 Questions about Probate

Have you ever heard anyone talk about 'avoiding Probate' but aren't exactly sure what that means? This week, #unstuckestateplanning is focusing on five common questions about Probate.

Probate is the court process that validates a Will as authentic; gives the Executor authority to act; and oversees the Executor's work in valuing the assets of the deceased, paying final bills and debts, and making distributions of what remains according to the Will's instructions. If someone dies without a Will, they are "intestate." The probate process still occurs, but the distributions follow the rules of state laws.

Question 1: When does the "reading of the Will" happen? Quick answer: it doesn't.

We've all seen or heard about this, and while it makes for good tv, it doesn't happen in real life (anymore). This practice dates back to a time when many people were illiterate, so the attorney would gather everyone together to read the Will aloud.

Today, if you are the beneficiary of a Will, you're much more likely to find out the particulars via a letter, email, or phone call. ⠀

Question 2: How does Probate start? Probate, as a court process, typically starts at some point after the funeral / memorial / burial / cremation / (fill in the final disposition of the deceased's choice) occurs. 

The exact Probate process varies state-to-state, but it generally looks something like this: 

1. Someone comes to the county courthouse (or appropriate government office in their local area) with the deceased's Will -or- when without if there was no Will. 

2. They complete paperwork and probably pay a filing fee.

3. The Court reviews the Will (/"proof" there was no Will) and the accompanying paperwork. 

4. If the Court finds everything in order*, they will issue official documents giving legal authority to an Executor/Personal Representative to act on behalf of the estate. And, now Probate has started.

*Sometimes, the Court needs more/different documentation or information or requires something in the paperwork to be corrected/addressed before they will allow the matter to move forward.

Question 3: How does Probate end? Probate ends when the Executor has completed their tasks on behalf of the estate, such as:

1. Valuing and consolidating assets;

2. Paying final bills and debts;

3. Closing out or transferring accounts, memberships, etc.;

4. Assisting, as needed, with the filing of beneficiary claims (for life insurance and retirement accounts);

5. Filing state and federal taxes (and paying any amounts due);

6. Making distributions according to the Will's* instructions; and

7. Completing all necessary paperwork to the Court's satisfaction.

*If someone dies without a Will, they are "intestate." The probate process still occurs, but the distributions follow the rules of state laws.

Question 4: How much does Probate cost? When people talk about the costs of Probate, most often they are referring to court fees.

For "standard"* cases in North Carolina, the current fees are:

• Filing fee (currently $120) +

• Estate value fee (currentlythe larger of $15 or $0.40 per $100 of gross estate^ value up to $6,000)

So the minimum fee is $135 (gross estate value of $3,750 or less), and the maximum fee is $6,120 (gross estate value of $1,500,000 or more).

Oh, the fine print:

*There are several different types of Probate/Estate cases in North Carolina depending on the specifics of the situation.

^Gross estate value does not include non-probate assets or unsold real estate.

Question 5: Why do people want to “avoid Probate”?

A common goal clients tell me is they want to avoid Probate. Why?

1. Time: The Probate process has a built-in timeline with specific tasks to complete, and one of the very last is distributing assets to beneficiaries.

2. Money: Probate requires court fees (see yesterday's post) and, depending on the complexity of the situation, may also require the assistance of an attorney and/or an accountant. 

3. Privacy: since Probate is a court process, filings are public records (varies somewhat state to state), and one of the to-dos is generally publishing a "Notice to Creditors" in the newspaper. 

On the other hand, certain parts of the Probate process can be very beneficial. In some situations, the timeline, task list, and court oversight are preferable because they ensure everything gets taken care of, including proper distributions of assets. And, without the "Notice to Creditors" publication, there's always a chance a previously unknown creditor will show up with a demand for payment long after the death of the debtor.

A common estate planning strategy to avoid Probate is through having a Revocable Living Trust, but that's not the only way. Want to learn more? Get in touch with me or another estate planning attorney.