Probate Considerations
What is Probate?
What are Probate Assets?
What are the Disadvantages to Probate?
What is Probate?
Probate is the court supervised process of validating wills,
ensuring that creditors and taxes are paid, and distributing
assets to the rightful heirs.
What are Probate Assets?
There is often confusion between what constitutes taxable
estate assets and what constitutes probate assets, but the
distinction can be extremely important. Assets that will
be included in your estate for death tax purposes include
many assets you may not think of when considering your personal
net worth, such as the proceeds of life insurance policies,
amounts payable under pension, profit-sharing and other
retirement plans, deferred income, and interests in trusts
created by others.
Your probate estate may, however, be much smaller than
your taxable estate and you may, in fact, have no probate
estate whatsoever. Probate assets are those that pass under
the terms of your will or under the laws of intestacy should
you die without a will. Non-probate assets are those that:
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Pass by beneficiary designation, such as life insurance
proceeds;
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Pass by contract, such as under a buy/sell agreement;
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Pass by operation of law, such as property held in
joint tenancy with rights of survivorship; and
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Assets transferred during lifetime to a “Living
Trust” which sets out terms for management and
ultimate distribution of trust assets.
It is, therefore, essential that you coordinate the beneficiary
designations of non-probate assets with your overall estate
plan.
What are the Disadvantages to Probate?
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Probate costs can be significant.
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The probate process can result in substantial delays
in transferring assets and closing an estate.
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Loss of privacy because the size and details of an estate
in probate are matters of public record.
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