Probate property may be a term you’ve heard a few times. But what does it really mean? Let’s break it down. To understand the term probate property, you must first understand probate.
What is Probate?
Probate is the court-supervised process of proving the validity of a Will. When someone dies and they leave a Will behind, the court must determine the Will is valid. Once it is verified, the desires and the instructions of the deceased may be carried out by an appointed Executor (also known as a Personal Representative). This usually involves distributing the deceased’s property to the people specified to inherit it in the Will.
If someone dies without a Will, their properties and assets must still go through probate before it can be distributed to the heirs. This is called an Intestate Probate. There is no need to prove the validity of any estate planning documents, but there is a need to clarify the succession of heirs for the court. Each state has a different “intestate succession” laws, but usually the order is as follows:
spouse à children à parents à parent’s descendants (siblings)à grandparentsà the state
Any property being distributed via the probate process is probate property. This can apply to both real and personal properties. This does not mean, however, that each of Grandma’s porcelain figurines will be going through probate. Most states have laws and dollar limits on what qualifies a property or asset to go through probate. Think big-ticket items, like the following assets:
- Real property (homes, vacant land)
- Bank Accounts
Exception: if the above assets are held jointly, for example with a spouse, then often that property passes directly to the spouse, no probate needed.
Luckily, many assets are not subject to probate if precautionary steps are taken. For example, bank accounts, life insurance policies, and retirement accounts usually have Payable-On-Death (POD) beneficiary designations. This means that you can formally designate the beneficiary of that account while you are still alive. Upon your death, that asset will pass directly to the beneficiary you named, instead of being subject to probate.
Do you need Probate?
Probate gets a bad rap because it can be expensive, stressful, and time-consuming. The good news is that there are ways to set up your estate to avoid probate as much as possible. If a family member of yours has recently passed, or if you want to learn more about how your family can avoid probate upon your passing, consider meeting with an estate lawyer Phoenix, AZ offers.
Thanks to Kamper Estrada, LLC for their insight into estate planning and probate.