Probate gets a lot of negative press. You’ve probably heard stories about how time consuming and expensive it can be. Fortunately, not all property needs to go through this legal process before it passes to your heirs. So, you ask, when is probate not necessary?
The quick rule of thumb is probate is not required when the estate is “small”, or the property is designed to pass outside of probate. It doesn’t matter if you leave a will. Let’s take a closer look at each of these exceptions.
Benefits of a Small Estate
Being small can have its advantages when it comes to probate. Most states recognize the complexity of this legal process is unnecessary for transferring a modest estate. So when the deceased’s remaining property is valued below a state-determined amount, assets can be distributed to beneficiaries without going to court. In California for example, an estate valued at $150,000 or less may not need to go to court. In Nebraska, the threshold is $50,000 or less.
Figuring out if your estate qualifies as “small” only takes a few simple steps.
Sometime can be a good idea to open probate even when it’s not required, especially if there are concerns over creditor claims or beneficiary disputes. Before relying on the small estate exemption to probate, it’s important to understand the laws of your state and how your assets are valued. Losing a loved one is a difficult time for family and friends. Don’t leave things to chance.
Property that Transfers Outside of Probate
Not all property needs to go through probate. That’s good news for beneficiaries because property that passes outside of probate is distributed much sooner. Assets that typically don’t go through probate fall into the following three categories:
1. Jointly Owned Property
with the "right of survivorship" avoids the probate process because ownership transfers immediately to the surviving owner(s) after a co-owner’s death. There are few ways to jointly own property that creates this right of survivorship including:
2. Designated Beneficiary
The designated beneficiary is the person selected to inherit an asset, such as bank account, or the money from a life insurance policy. When you die, assets with a designated beneficiary will immediately transfer to the named person. Naming a beneficiary to many of your accounts simply requires filling out a short form. Assets that can have a named beneficiary include:
Trusts are designed to allow your family, friends and causes you care about to inherit from you without having to go through the long and expensive probate process. There are many different types of trusts serving a variety of purposes, including:
Want to Avoid Probate? Get a Free Case Review
Probate can be a financial drain on your estate and cause your loved ones’ unnecessary stress. An experienced attorney can help you draft an estate plan that transfers your property without all the hassles. Get a free case review today to see what step you can take to avoid probate.