Tag Archives: probate estate

Probate Avoidance


One of the most important things to understand about estate planning is the importance of property title.  The way property is titled impacts what type of paperwork and procedure is required when someone dies, and if someone becomes incapacitated.

People may think a will avoids probate. In fact, a will has nothing to do with whether or not probate is required.

Probate is required when you own property as an individual, or when the term “estate” is used to identify an owner or a beneficiary on title and other ownership documents.  The way to avoid probate is make sure that property you own is not titled in these manners.

Q. What are probate assets?

A. The probate property page explains how property title determines whether the asset is considered a probate asset, i.e., property titled only in the name of the decedent, or when the “estate” is listed as a beneficiary or becomes the default beneficiary.


Q. What are non probate assets?

A. The probate property page explains how property title determines whether the asset is considered a non probate asset. Non probate assets are assets whose title is transferred to the beneficiary by operation of law or by contract.

Individuals who want to avoid probate need to make sure their property is titled so title transfers by operation of law, i.e., joint tenants with rights of survivorship, or by contract law, i.e., payable on death beneficiary designations, and living trusts.


Q. What are the pros and cons of using joint tenancy with rights of survivorship as a way to avoid probate?

A.Married couples routinely own property titled as Joint Tenants with Right of Survivorship.  When the first spouse dies, the surviving spouse automatically inherits the property and eliminates the need for probate..

Because the surviving joint tenant wants to avoid probate when they die, the surviving spouse often considers adding one or more of their children to the deed as a method of avoiding probate.  Although the use of joint tenants with rights of survivorship can avoid probate, consider these facts before adding someone as a joint tenant.

  • The property is subject to creditor claims from both joint tenants, regardless of who originally owned the asset.
  • There is no step up in the tax basis of the property when you die.  When someone receives a gift, they also receive the cost basis the person giving the gift had.
  • You are giving away the opportunity to do tax planning involving that property after you have made someone a joint tenant.
  • The transfer into joint tenancy may be considered a taxable gift.
  • In some states, the person making the gift may lose homestead or other property tax rights once a joint tenant is added.
  • In some states, a divorcing spouse is allowed to make claims against property in which the other spouse has a joint tenancy interest.
  • A gift can impact your eligibility for Medicaid.
  • Naming someone to jointly own your property is not the same as naming someone to inherit the property when you die.  When you add a joint tenant, any action you want to make regarding the property must be agreed to by the joint tenant, including the sale or refinancing of the property.


Q. What are the pros and cons of using designated beneficiaries as a way to avoid probate?

A . Naming a designated beneficiary is required on certain types of ownership documents, i.e., life insurance policies and retirement accounts. You have the option to name a beneficiary on other types of property, including bank accounts and brokerage accounts.

You may also avoid probate by designating a beneficiary for the following types of assets.  If you jointly own these assets, each owner may need to sign the beneficiary forms.  The designated beneficiary has no rights to the property until the owner(s) die.

  • Checking and Savings Accounts. You can complete a pay-on-death beneficiary form along with the signature card provided by the bank for savings, checking or certificate of deposit accounts.
  • Brokerage Accounts: You can complete a transfer-on-death beneficiary form along with the signautre card provided by financial institutions.
  • Savings Bonds: You can name one designated beneficiary for each savings bond you buy.  You can also designate one beneficiary for Treasury bills and Treasury notes.
  • Vehicle: Some states allow you to name a designated beneficiary when you complete your car or boat registration forms: California, Connecticut,Kansas, Missouri and Ohio.
  • Real Estate.  If you purchase real estate, some states allow you to name a designated beneficiary when you complete a transfer-on-death deed.   Transfer-on-death deeds are currently only available in these states: Arizona, Colorado, Kansas, Missouri, Nevada, New Mexico and Ohio.
  • When naming a beneficiary, keep this in mind:
  • Beneficiary law overrides any instructions in your will or trust.
    If you name more than one beneficiary, ask what happens if one of the beneficiaries dies before the owner does, or at the same time as the owner. Make sure the results are the ones you want.
  • If you name more than one beneficiary, ask whether the beneficiaries inherit on a per stirpes or a per capita basis


Q.   What are the pros and cons of using a living trust to avoid probate?

A. You can avoid probate by transferring the title of property you own as an individual to yourself as trustee of a living trust.  Trust assets are generally not subject to probate in any state.

Although there are some costs involved in setting up the trust, these costs may be offset (if you don’t have a trust) by the cost of probate and the cost to your heirs of not having access to the estate assets for some period of time.

In many instances the use of a living trust is the preferred way, and sometimes only way,  to avoid probate when you die.

A living trust can also avoid the need for probate as you age and need help managing your affairs, or for managing the affairs of a minor child.


Probate Estate


The word “Estate” is used to describe the net worth of the decedent when he or she dies.   The value of the estate includes all of the assets and all of the liabilities of the decedent on the date of death.

The definition of the decedent’s estate is not the same as the definition of the decedent’s probate estate.   The way property is titled will determine where the asset is included as part of the decedent’s probate estate.

Title is the manner in which both real and personal property is owned.   Title may be proven by certificate, deed, bill of sale, contract, signature cards or other documents.   The title document may also designate a beneficiary.

The title may state an individual owns the property, multiple people own the property, i.e., joint tenants with rights of survivorship, or a trust owns the property.

It turns out title is more than a piece of paper conveying ownership of a house, a car or a safe deposit box.  Property title determines whether contract law governs the inheritance of the property or whether the wishes written in your will or trust govern the inheritance of the property.

When someone dies, the estate representative will review the way property is titled.   Based upon the method of title, think of the decedent’s estate as going into three buckets: the probate bucket, the trust bucket and the automatic inheritance bucket.  Which bucket the asset belongs in is determined by the way the property is titled.

Property placed in the probate bucket comprise the decedent’s probate estate.   All of the property represents the decedent’s total estate.

What assets belong in the probate bucket?
What assets belong in the trust bucket?
What assets belong in the automatic inheritance bucket?
Why do the asset buckets matter?

Q. What method of title places property in the probate buck?

A. Probate assets include the following method of title:

  • Property owned by an individual
  • Property owned as joint tenants with rights of survivorship, no living joint tenant
  • Property where “estate” is the designated beneficiary
  • Property where “Estate” is the named beneficiary or becomes the default beneficiary because the designated beneficiary died before the owner
  • The decedent’s share of property owned as tenants in common
  • Community Property with right of survivorship, a living joint tenant.


Q. What method of title places property in the trust bucket?

A. A trust asset is property where the trustee is named as the owner of the property, or the trust is named as a designated beneficiary.


Q. What types of assets belong in the automatic inheritance bucket?
A.  Certain types of property have automatic inheritance rights, whereby contract law determines who owns the property.     Contract law overrides any instructions contained in a will, a trust, or state intestate succession laws.

  • Joint tenants with right of survivorship, a living joint tenant
  • Community property with right of survivorship, a living joint tenant
  • Property owned by an individual, or more than one person with a designated living beneficiary:  life insurance policies, retirement account, pay on death bank accounts, transfer on death brokerage accounts, transfer on death real estate deeds and transfer on death vehicle registration forms.


Q. Why do the buckets matter?

A. Once you know in what bucket the asset belongs , you can understand the size of the probate estate and the size of the total estate.

Probate assets will be managed by the executor named in a will or by a personal representative appointed by the court if there is no will.

  • Instructions in the will generally determine the beneficiary of your probate assets.  If there is no authentic last will and testament, state intestate succession rules determine the beneficiary of probate property.
  • The executor or personal representative must determine the value of the probate estate and whether the probate estate include real estate.  The estate representative will the know whether the estate can be settled using small estate procedures or if a normal probate case is required.

Trust assets will be managed by the successor trustee named in your trust. Instructions in your trust determine who are beneficiaries of assets owned by your trust.  The trust gives the successor trustee the legal authority to manage trust assets

Assets with automatic inheritance rights will be managed by the beneficiaries who automatically inherit the property. The law automatically determines the beneficiaries and overrides any instructions contained in a will or trust.  A beneficiary has the authority to immediately claim their property with a certified death certificate and an affidavit or other claim form.

Some examples:

A bank account or brokerage account titled only in the name of the decedent is a probate asset.  But if the decedent completed a payable upon death form for a bank account or a transfer upon death form for a brokerage account, the bank account or brokerage account is not subject to probate.

A life insurance policy that names a beneficiary who is living at the time the decedent dies has automatic inheritance rights is not a probate asset.  If the “estate” is the designated beneficiary, the life insurance policy is payable to the decedent’s estate and is a probate asset.

Property owned by a husband and wife as joint tenants with rights of survivorship has automatic inheritance rights and is not a probate asset when the first owner dies.

Real estate titled in the name of the decedent and another person as tenants in common is a probate asset.


Probate Fees


Billions of dollars are spent each year for probate.  Probate fees include court costs, personal representative costs, executor fees, attorney fees, bond fees and appraisal fees.

There is a wide variance in what it costs to open and file a probate case.  Examples of such fees and costs include the following:

  • The fees your attorney and estate representative charge.  Some states set “reasonable fees” as the statutory attorney fee and the executor fee, usually based on a percentage of the gross value of the estate.  You can find out the statutory fees allowed for attorneys and executors in the probate reference tables.
  • The types of services the attorney performs.  Besides statutory fees allowed for completing and filing probate forms with the courts, attorneys have the right to seek payment for “extraordinary services performed” whereby they deliver value to the estate due to unusually difficult or complicated circumstances posed by the probate.  For instance, attorneys can charge an extraordinary fee if they are asked to review real estate sales documents.  This task is not part of the normal statutory fee.
  • The type of real estate the deceased owns.  If the deceased owns real estate in another state or another county, it may be necessary to open a second probate case in that state and county and pay additional attorney fees and probate filing fees.
  • The cost of a professional testamentary trustee (a trustee of a trust created by a will).  If through your will you create a Testamentary Trust, the trustee also has the right to charge the statutory or reasonable fees allowed by the state and/or contemplated by the testamentary trust provisions.
  • The fees the courts charge to open a probate case.  Some states base court fees on a percentage of the gross value of your probate assets.
  • The cost of buying a Surety Bond for your executor, guardian or conservator, which is paid from your probate assets.
  • The type of probate process required.   A simple probate case will cost less time and money than a normal probate filing.   The forms and procedures available to a surviving spouse can cost less time and money than a normal probate process.

FACT: Estimated Probate Costs

Available research shows probate costs can consume between one to eight percent of the value of your probate estate when you die.

Probate Forms


The type of probate forms and probate procedure required is determined by state probate code.   The state code generally offers a simplified type of paperwork for small estates and surviving spouses.

Q.    How do you calculate the value of the probate estate?

A.   The probate property page explains how family member or personal representatives can calculate the value of the decedent’s probate estate.

Pay careful attention to how state statues determine the value of probate property.   Some states define the dollar limit as your gross estate (the market value of everything you own with no deduction for debts).  Other states define the value as the net value, the fair market value of the asset less any secured debt).  Some calculate the value of the net probate estate (net value only of property left by will).


Q. How do you know if the estate qualifies for a small estate procedure?

A. The probate state reference tables summarize the small estate procedures for each state and describe whether a state support a summary administration procedures or an affidavit procedure.

The tables summarize the type of property and the dollar limits for each state.  State probate codes are also listed so you can go on line and find out more about state probate rules.   .

You can also contact the probate court and see if they can provide information or resources relating to the administration of small estates.

A probate attorney will understand the nuances in the rules and help you decide if the estate qualifies for simplified small estate procedures


Q. What is summary administration?

A. A summary administration is an abbreviated proceeding before a probate judge either with a will or intestacy when the value of the entire estate subject to administration in the state meets the small estate state limits.   These limits are usually based on the dollar value of the estate, and in some instances, the dollar value of real property versus personal property.

A judge can have an initial hearing and immediately authorize distribution of the assets to the beneficiaries.


Q. What is a small estate affidavit procedure?

A.   Some states probate code allow a small estate to be administered by the use affidavits.    The affidavit gives the person named on the affidavit the legal authority to manage the assets, including requests to transfer title from the name of the decedent to a new beneficiary.


Q. What is an affidavit?

A. The estate representative or the beneficiary fills out a claim form referred to as an affidavit, stating the owner has died and that he is the new owner of the asset.  The new beneficiary sends the affidavit and a copy of the death certificate to the person or entity holding the probate asset (i.e., a brokerage firm or a bank), and requests the probate asset be transferred into the name of the new beneficiary.


Q. What happens in a normal probate procedure?

A.    A normal probate process is a court-supervised process.  The courts monitor the steps the personal representative takes, adding significant time and costs to the probate process.  Furthermore, unless you waive bond in your will, your estate representative may be required to post a bond guaranteeing his or her performance and protecting creditors.  The entire probate process is supervised by the probate court.   You, or a probate attorney, files documents so the following can happen:

  • A judge determines whether or not the decedent’s will is valid
  • The executor named in the will or the personal representative appointed by the court creates an inventory of the decedent’s probate assets and takes control of the assets; pays the decedents legal debts; files income and estate tax returns; and distributes the remaining probate assets to the individuals or entities entitled to the assets in accordance with the will or laws of intestacy
  • The court approves the transfer of the decedent’s assets to the individuals and entities designated in the will or laws of intestacy.   Letters of Administration are issued by the probate judge to a personal representative, showing that the personal representative has the authority to act on behalf of the estate.

A relatively uncomplicated probate case can take over a year from filing to closing.  During that time, the beneficiaries have neither possession nor control of the property left to them although, in certain circumstances, the beneficiaries may petition the court for a living allowance and/or special funds for things like tuition payments.

Probate takes time because the process is a sequential process, with some time period required before the next step can take place.  For instance, a probate case requires sending out a notice to creditors.  The court gives the creditors four months to respond.  If your estate must file a federal estate tax return, the case will not be closed until the IRS approves the estate tax returns.  If the value of your probate assets requires a complex probate procedure, probate could last six to twelve months.

This is one reason someone who opens a probate case immediately gets a direct mail piece offering to loan money while waiting for his or her inheritance.


QAre surviving spouses subject to probate?
A. Yes.  However, many states allow a surviving spouse to complete and file a special type of probate form and follow an expedited process.


Q. What if real property is owned in a different state?

A. If real estate is owned in more than one state, the estate representative must calculate the probate value of the real estate in each state.  An ancillary probate procedure is required in the state where the real estate is located.  State laws will determine if the ancillary process can be accomplished with affidavits.


Probate Without a Will


There are two types of probate estates:  (1) intestate; and (2) testate.

The probate procedure followed if the decedent  did not leave a valid Will is referred to as an intestate estate..

A probate procedure followed if the decedent did leave a valid Will is referred to as a testate estate.

Q. What is the difference between a testate estate and an intestate estate?

A. For a testate estate, the Will controls who receives the decedent’s assets and the Will nominates an executor who manages the probate process.

In an intestate estate, state intestate succession laws dictates who is entitled to the estate.  State laws also determine who the court appoints as the personal representative to manage the probate process.

One other difference between a testate estate and an intestate estate is the rules regarding surety bonds.  The person who prepares a Last Will and Testament can include instructions waving  the executor’s requirement to purchase a surety bond.  This requirement of the personal representative to purchase a surety bond cannot be waived in some state when there is no valid Last Will and Testament, making the probate process most costly for intestate estates.


Q. Are the duties of the personal representative any different than those of the executor?

A. The personal representative appointed by the court has the same responsibilities as an executor named in a will.

The personal representative  must inventory the decedent’s estate and determine if the estate has probate assets.   If the estate has probate assets, the personal representative must determine whether to follow the state rules for small estate or a court supervised formal probate procedure.