Probate is one of those things that you have probably heard of, but know very little about unless you have been through the probate of an estate at some point during your lifetime. Everyone, however, should have at least a basic understanding of the probate process for their own estate planning purposes. Because the primary purpose of probate is to distribute your estate assets after your death, you should understand the relationship between probate and property. To help you, consider the following “5 Things You Need to Know about Probate and Property.”
First Things First — Probate Basics
Probate is the official name for the legal process that will likely be required following your death. Although the final step in the probate process is to distribute the remaining assets from the decedent’s estate, probate also serves several other purposes, including:
- Authenticating the Last Will and Testament submitted to the court for probate
- Identifying and locating the legal heirs of the estate
- Identifying, locating, and securing all estate assets
- Notifying potential creditors of the estate and allowing them the opportunity to file claims against the estate.
- Ensuring that taxes owed to the state and/or federal government are paid
- Transferring estate assets to the intended beneficiaries and/or heirs of the estate
Probate and Property
In essence, the probate process is all about property. Specifically, probate is about the property that makes up your estate. With that in mind, consider the following five things you need to understand about probate and property:
- Not all property is probate property. One of the first things your Executor or Personal Representative must do during the probate of your estate is to categorize estate assets as probate property or non-probate property. Probate property becomes part of the probate process whereas non-probate property will pass to the intended beneficiaries outside of the probate process. Examples of non-probate assets include:
- Property held in a trust
- Property held in a “payable on death (POD)” or “transfer on death (TOD)’ account
- Proceeds of a life insurance policy
- Certain types of jointly owned property
- Assets held in a retirement account
- The Commonwealth of Massachusetts could decide what happens to your property during probate. When a decedent leaves behind a valid Last Will and Testament the decedent is said to have died “testate.” When a decedent fails to leave behind a valid Will the decedent is said to have died “intestate.” If you die intestate, the Commonwealth of Massachusetts (or whatever state you live in at the time) will decide what happens to your estate assets using the state’s intestate succession laws.
- Your estate may qualify for a small estate alternative to distribute your property. Not all estates are required to go through the lengthy, and costly, process of formal probate. If your estate is relatively modest and does not include complicated assets it could qualify to use a small estate alternative.
- The more probate property you have, the costlier the probate process will be as a general rule. Although no two probates are the same, it will generally be costlier, both in terms of time and money, if your estate includes high value and/or complex assets. In short, the larger your probate estate is, the more it will cost to probate the estate.
- Your property could end up being sold during the probate of your estate. If you fail to plan ahead, and plan well, your estate property could end up being sold during the probate of your estate. Estate assets could be sold to pay state and/or federal gift and estate taxes. Your estate could also lose estate property to creditors or it could be sold because of the need to abide by the proportionate distribution required by the state’s intestate succession laws if you die without a Will in place.
If you have additional questions or concerns regarding probate and property, contact the experienced Massachusetts estate planning attorneys at Debruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.