Probate is a term used to describe the legal process of transferring the assets of a deceased person to their heirs or beneficiaries. In estate planning, probate is an important topic that requires careful consideration to ensure the assets are distributed according to the deceased person’s wishes while avoiding unnecessary costs and delays. In this blog post, we will discuss the basics of probate in estate planning and provide tips for avoiding probate when possible. Click www.kanialaw.com/tulsa-estate-planning-attorneys/probate-in-oklahoma to learn more!
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The Probate Process
When a person passes away, their assets are typically subject to probate if they do not have a valid trust in place or if their assets are not otherwise distributed through beneficiary designations, joint ownership, or other means. The probate process can vary depending on the state in which the deceased person lived but typically involves the following steps:
- Filing a petition: The first step in the probate process is to file a petition with the court. This petition is usually filed by the executor of the deceased person’s will or by a family member if there is no will.
- Notifying creditors and beneficiaries: Once the petition is filed, creditors and beneficiaries must be notified of the death and the probate proceedings.
- Inventorying assets: The executor is responsible for identifying and inventorying the deceased person’s assets, including real estate, bank accounts, investments, and personal property.
- Paying debts and taxes: Any debts or taxes owed by the deceased person must be paid out of their estate before assets can be distributed to beneficiaries.
- Distributing assets: After all debts and taxes have been paid, the remaining assets are distributed to the beneficiaries following the deceased person’s will or state law if there is no will.
The probate process can be time-consuming and expensive, with court, legal, and executor fees all adding up. In addition, the probate process is public, meaning anyone can access information about the deceased person’s assets and beneficiaries.
Given the costs and delays associated with probate, many people avoid it when possible. There are several ways to avoid probate, including:
- Creating a revocable living trust: A revocable living trust is a legal document that allows you to transfer assets to a trust during your lifetime. The trust becomes the legal owner of the assets, but you retain control over them while you are alive. When you pass away, the assets in the trust are distributed to the beneficiaries without going through probate.
- Using beneficiary designations: Certain assets, such as retirement accounts and life insurance policies, allow you to name a beneficiary who will receive the assets upon death. By using beneficiary designations, these assets can be transferred directly to the beneficiary without going through probate.
- Joint ownership: Jointly owned assets, such as a house or bank account, can be set up to automatically transfer to the surviving owner upon the death of one owner. This can help avoid probate for those assets.
- Gifting assets: You can gift assets to your beneficiaries during your lifetime, which can help avoid probate. However, this approach can have tax implications and should be done with the guidance of an estate planning attorney.
It’s important to note that not all assets can be transferred outside of probate. For example, assets solely in your name and do not have a beneficiary designation or joint owner will typically go through probate. Additionally, if you have minor children, a will is necessary to name a guardian for them.