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What is probate, and how does it work?

Not every estate has to go through the full probate process. Understanding the process can help you see what’s needed and plan ahead. 

What is probate?

Probate is a legal process for settling an estate according to the will. The taxable estate is made up of all assets your loved one owned or held an interest in, but only assets held individually in their name will generally have to go through probate. 
The probate process varies by state—many states offer a quicker, less expensive option if the assets subject to probate are below a certain value (for example, $25,000 or $50,000). Probate is also public record, so it decreases the level of privacy of the estate. 
When someone passes away without a will, or intestate, the probate court uses the state intestacy laws to decide how to pass assets to heirs. 
There may not be much you can do to avoid going through probate once a loved one has passed away, but it helps to understand the process as you work with an attorney or tax advisor. 

When is probate required?

Some of the more common assets that pass through include: 
  • Cash, cash accounts without TOD designations 
  • Personal property, including valuable items 
  • Real estate 
  • Assets and accounts that allow naming of beneficiaries (investment and some cash accounts, including IRAs and workplace accounts), but for which none have been named 
  • Assets held as tenants in common 
Trusts, including assets placed in trusts that might otherwise have to go through probate (cash, real estate), and insurance policies usually do not go through probate. 
You should consider discussing your specific situation with your attorney or tax advisor. 
Do assets with beneficiaries go through probate? 
Accounts or assets with named beneficiaries usually won't go through probate, including most assets held in trusts. This includes assets, such as investment accounts with transfer on death (TOD) designations and retirement accounts (IRAs and workplace accounts). 
Assets with joint ownership with right of survivorship pass to the second owner when the first owner dies. If there is a TOD on the account, the assets will only go to the beneficiary if both joint owners pass away. In either case, these assets generally don’t go through probate. 
Note, if a named beneficiary conflicts with information stated in the will, the named beneficiary usually receives the assets over the individual named in the will. 
Other laws that vary from state to state may apply and dictate how the assets transfer. If there is any doubt associated with the beneficiary, the question is resolved through the probate process. 
What happens if the beneficiary is not named or is unclear? 
If the beneficiary designation is missing or rules of succession for the asset don’t clarify the matter, then the asset is transferred according to the will, if there is one, or to the deceased’s estate. In either case, the asset will likely have to go through probate. 

The costs of probate

Because every inheritance is different, it's hard to predict how much probate will cost and how long it will take. The cost will vary by the size and makeup of the estate, the laws of the state where your loved one lived, and the will (if there is one and how it was written). 
Probate costs can include: 
  • Court fees 
  • Appraisal and valuation fees 
  • Account fees 
  • Fees paid by the executor 
  • Your attorney's fees to represent you in the process 
The typical cost of probate usually adds up to a range of about 2% to 5% of the value of the assets that go through the process. 
Probate also delays the transfer of the assets. The delay varies by state and the size and makeup of the estate. Some states have a minimum, such as 4 months, and some states can take more than 2 years to complete the process. 

What to do when there’s no will or executor of estate

Dying without a will is known as intestacy. In these cases, a petition must be filed with the probate court to begin the process and figure out who will act as administrator of the estate. The person who is appointed by the court, or who takes on the role of the executor, is typically the spouse or next of kin. This person is named the administrator or personal representative. Each state has laws about who can serve as a personal representative.1 
Probate court is necessary when someone dies without a will. It helps to prevent problems by ensuring a lawful resolve and proper distribution of financial and estate assets. 

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1. “What happens to property if there is no will?,”,

This information is general in nature and provided for educational purposes only.

Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.