Probated is a term used to describe the process of probate. Probate laws govern distribution of assets upon death. Everything you own is transferred to probate court unless a trust is established prior to death. A judge validates your Will and the designated estate administrator must follow protocol before assets can be distributed.
Methods exist to avoid having a will probated. The first method involves executing a Last Will and Testament. Although this act does not stop the probate process, it is an integral part of estate planning. A Will is used to designate a probate executor and beneficiaries.
The probate administrator oversees many aspects of the estate including obtaining property appraisals, paying outstanding debts, and distributing assets to named beneficiaries. If you die without executing a Will, a judge will appoint an administrator and decide who receives your assets.
The will can be placed into a revocable living trust or irrevocable life insurance trust. Think of ILITs as a container that holds your life insurance policy. The trust includes a contract used to administer your life insurance policy on behalf of the designated beneficiaries. Wills held within the trust do not need to be probated and death benefits are exempt from estate taxation.
Assets placed within a revocable living trust are not probated. Trust assets include titled property such as real estate and automobiles. Property owned by the trust is automatically transferred to named beneficiaries without the need for probate.
Establishing beneficiaries for bank accounts, life insurance, financial portfolios and individual retirement accounts is a simple way to avoid probate. Individuals can establish payable on death (POD) beneficiaries for checking and savings accounts by filling out a short form through their bank.
In order for distribution to occur, heirs must present an original death certificate and proper identification. In most states, tax forms must be submitted to the county tax assessor. As long as the decedent does not owe taxes, the county assessor will sign-off on the form. If outstanding taxes exist, they must be paid prior to distribution of assets.
Transfer on death (TOD) beneficiaries can be established for life insurance proceeds, individual retirement accounts (IRA), 401k and annuities. The process is the same as POD accounts and beneficiaries can be added or deleted at any time prior to death.
Establishing rights of survivorship can keep property holdings from being probated. Rights of survivorship allow property to automatically transfer to named beneficiaries without undergoing the probate process.
Death is never an easy thing to deal with. Dealing with probate after the death of a loved one can prolong the grieving process because probate can drag on for months or years. Engaging in estate planning is one of the best gifts you can give your loved one.
We encourage you to browse our probated article library which encompasses estate planning, probate, trusts and end-of-life matters. Here you will find information and resources to help determine which type of planning best suits your situation.