Probate is the legal process of estate administration, and it takes place under the supervision of the Surrogate’s Court here in New York. Generally speaking, transfers of assets that are in your sole, direct personal possession at the time of your passing are subject to probate.
Simplified Probate Procedure
There is one exception to the rule when it comes to asset transfers that would ordinarily be subject to the full probate process. New York has a simplified procedure that can potentially be used if the property has a gross value of $50,000 or less (excluding real estate).
If the conditions are met, the executor of the estate can submit a request to the court asking permission to use the simplified probate procedure. The full probate process would not be necessary if the court grants the request.
Probate-Free Asset Transfers
In addition to this probate shortcut, there are some types of transfers that are simply not subject to probate.
When you open a bank or brokerage account, you can add a beneficiary to the account. This is called a payable on death or transfer on death account. While you are alive, the beneficiary would have no access to the funds in the account, so you would retain full control.
After your passing, the beneficiary would present the death certificate to the institution. The account would be transferred to the beneficiary if everything is in order, and probate would not be a factor.
Property that is held in joint tenancy would pass to a surviving joint tenant outside of probate, and life insurance proceed transfers fit into this category as well. If you are the beneficiary of an individual retirement account, the court would not be involved in the transfer.
Revocable Living Trust
Probate serves a purpose, because the court determines the validity of the will and creditors are given a chance to come forward before the estate is distributed to the heirs. However, it comes with a few drawbacks that negatively impact the inheritors.
Depending on the situation, probate will typically take between eight and 18 months to run its course. The people that are in line for inheritances have to wait it out, and this is certainly less than ideal.
There are expenses that accumulate during probate, including the executor’s remuneration, legal fees, accounting charges, appraisal and liquidation expenses, and incidentals. These expenditures reduce the value of the estate before it is transferred to the heirs.
Probate is a public proceeding, so anyone that wants to pry into the final affairs of the decedent can access probate records.
If you use a living trust as the centerpiece of your estate plan, you would act as the trustee while you are living, so you would have total control of the assets. In the trust declaration, you would name a successor trustee to assume the role after your passing, and your heirs would be the beneficiaries.
When the time comes, the trustee would follow your instructions and distribute assets to the beneficiaries in accordance with your wishes. The probate court would have no role in the administration process.
This is one advantage that living trusts provide, but there are a number of others that we will not cover here. However, you can check out this post to get all the details.
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