The Basics of Living Wills When you are unable to communicate for yourself, a living…
Although probate sounds expensive and complex, it is a standard legal procedure which formalizes how some assets pass from decedents to the heirs or beneficiaries of their choice. Whether or not you require probate depends on the type of property and how you own it, and the state laws in which you live. While probate can be a complex process for vast estates, it is a simple formality for most Americans. Essentially, probate allows a judge to give legal permission for assets to pass whether or not there is a last will.
Can You Skip Probate Altogether?
Revocable Living Trusts (RLT) avoid probate proceedings and allow assets to transmit to beneficiaries faster. The assets in the trust bypass the probate court and usually take precedence over any property you designate in your will. A clear determining indicator of the need for probate is the value of the decedent’s property. If the valuation is less than $50,000, the assets qualify for a simplified procedure in New York.
This small estate affidavit procedure is helpful if the probate asset valuations, excluding any property interest to surviving spouses or domestic partner’s community, minus liens, and encumbrances, is no more than $50,000. In the absence of a will, the administration, not probate, process must ensue, and the distribution of whatever assets may exist is done under the state intestacy law. There are ways to avoid probate even with a sizeable estate through careful planning. Probate avoidance not only will reduce legal fees in the long run, but it can mean avoiding estate tax, which can be significant in wealthier estates.
Can Assets Be Passed Outside of Probate?
Aside from an RLT, life insurance policies pass outside of probate. POD accounts (payable on death) can pass to your beneficiary without probate for your checking and savings accounts, money markets, CDs, and US Savings bonds; however, each account will require a complete beneficiary registration. Retirement accounts such as a 401(k) or IRA also pass to an adequately designated beneficiary outside the probate court.
Most pensions that are inheritable are under a form of trust and, as such, will also maintain their valuation outside of the probate process.
What Happens If a Revocable Living Trusts is Not Established?
In the absence of an RLT, using named beneficiaries in POD accounts and retirement accounts, or the probate process, there is almost no way to own inheritable property legally. A quasi exception exists in Florida, where a family may own property in a decedent’s name if they do not sell it and continue paying taxes. Each state has differentiation in inheritance laws, so it is essential to retain an elder law attorney for the state where you live.
Most families will contact the probate court whether or not the bulk of the estate will pass through the probate process. The will executor must file a request for probate in the county where the decedent was living and provide a death certificate. At this time, the probate court likely approves the executor named or designates one and provides letters of testamentary which legally permits the findings and processing of the decedent’s financial and other property accounts. We can provide specific answers to your estate questions regarding passing your probate and non-probate assets to your heirs. Please contact our office at (212) 920-6371 for assistance.