Understand Probate

Q: Todd, I’m really confused about probate.  I’ve heard so many different stories, would you please help me better understand the process?

A: Probate is the legal process of getting assets out of the name of a deceased person if that asset is “stuck” in that person’s name at the time of death.  Probate only affects those items that are not co-owned by another person (the item goes to the survivor in that situation such as a husband and wife situation where they owned everything jointly) and where there is not a beneficiary, typically seen in an insurance policy or a Pay On Death (POD) account.  If there is a beneficiary designation or a person listed as POD, then the asset goes to that person.  Probate typically effects real estate and bank accounts that are only in the deceased person’s name.

Probate involves court.  We have to go to court to get the items legally out of the person’s name.  Probate has to filed with the court with a listing of all the assets owned by the person, which is then public knowledge.  We then have to give notice to all creditors so that they can petition the court to get paid.  This process takes no less than six months so that everyone has time to get their paperwork in to the court.  Also, during this time, the family is waiting on the money and many times if there are any underlying issues, they may flair up and cause a problem.  We also have to get all property appraised and sold which is expensive and time consuming.  There are other significant fees such as attorneys and court costs.  Usually, the cost of getting an estate through probate will cost between 5% and 7% of the total estate.  So, just to get a $100,000 house through probate will cost between $5,000 and $7,000.  I will talk next week on ways to avoid probate.