Probate is a legal process that ensures the assets of someone who has passed away are distributed properly. If there is a will, it must be verified as legitimate by a court of law. The executor named in the will is then formally appointed to determine the value of the deceased person’s estate, pay off any debts or taxes (using funds from the estate), and distribute the remaining assets to named beneficiaries. If a person dies without a will, they are said to have died ‘intestate’ and their assets must be distributed according to state laws.
Is probate always needed?
Laws on probate vary from state to state. Most states do not require small estates to go through the probate process. Texas, for example, has an exemption for estates that are worth less than $75,000. Certain assets can also forgo the process. Assets that already have contractually agreed upon beneficiaries, such as jointly owned properties or life insurance proceeds, can be passed on without probate.
How long does it take?
The amount of time probate takes can vary significantly. The most important factor is whether or not there is a valid will. If there is a will in place that clearly distributes assets and is not contested by any of the beneficiaries, the process takes around six months. However, if there is no will, or if the will is deemed invalid or its contents are disputed, the process could take considerably longer. An estate being large or complex can complicate these situations further and probate may end up taking years.
Don’t let your estate end up in probate because no one knows you have a will. Create a Life Plan!
How much does probate cost?
The cost of probate depends on how much legal work will be needed. For large, complex estates or disputed wills there will inevitably be higher costs. Which state you live in also affects the cost of probate. A few fees that will apply to most cases are:
- Court fees – To open probate for an estate an initial filing fee must be paid to the court. This varies from state to state but is usually a few hundred dollars. Some states charge extra for more valuable estates. Complicated cases can lead to additional court fees.
- Executor fees – Executors must be compensated for their services with a fee taken from the funds of the estate. The amount to be paid to the executor may be stipulated in the will, but if it is not the fee must be decided by state law. Many states require a certain percentage of the estate’s value (usually around 5%) to be paid as compensation to the executor.
- Probate bond – Unless specifically exempted in the will, the executor is required to pay for (usually from the funds of the estate) and post a bond. The amount of the bond is determined by the probate judge and is typically based on the estimated total value of the estate. The bond company will charge a premium on the bond, usually around 0.5% of the bond’s value.
Beyond these fees are many other possible costs such as accounting fees, attorney fees, and business valuation fees. These costs may not apply to small estates but could be considerable for larger estates.