People sometimes make assumptions based on extrapolations that are incorrect, and this enters the picture when it comes to the need for probate.

You may hear that the probate process is necessary when someone passes away without a will or a trust. This can lead to the belief that probate would not be needed if you do in fact execute a simple will.

In fact, this is not the case at all. If you are passing assets on to your family with a will, the executor that is named in a will would admit the will to probate.

Probate Pitfalls

During probate, final debts are paid, including taxes. There is a proving of the will, so the court would examine the document to determine its validity. If anyone wants to contest the will, they can come forward while the will is being probated by the Surrogate’s Court.

The executor will inventory the assets and prepare them for distribution to the heirs. This will typically include appraisals and liquidation of property.

As you can see, the probate process serves a purpose, but there are some drawbacks that negatively impact the inheritors. One of them is the fact that they typically do not receive inheritances while the probate process is underway, and it can get lengthy.

Probate is a public proceeding, so anyone and everyone can access the records to find out how the assets were distributed. Lastly, probate costs consume a noticeable portion of an estate.

Simplified Probate Procedure

We should point out the fact that there is a simplified probate procedure in New York. It can potentially utilized if the value of the estate is $50,000 or less excluding real estate.

Probate-Free Transfers

There are some types of asset transfers that are not subject to probate, even if you did not intentionally try to implement a probate avoidance strategy.

When you open an account at a bank or a brokerage, you can name a beneficiary. This is called a payable on death account or Totten trust. The person that you name would have no access to the resources while you are alive, so there are no worries on that level.

After your passing, the beneficiary would obtain a copy of the death certificate and present it to the institution. If everything is in order, the funds would be released to them. Probate would not be a factor.

If you have a life insurance policy on your life, the transfer of the proceeds to a named beneficiary would not be subject to probate.

If you own property, you could create a joint tenancy that would make someone else the co-owner of the property. Joint tenancy comes with right of survivorship, so the surviving joint tenant would inherit the deceased tenant’s share outside of probate.

A proactive probate avoidance strategy will typically revolve around the utilization of a revocable living trust. You would act as the trustee while you are living if you establish this type of trust, so there would be no loss of control of the assets.

When you are establishing the trust, you would name a successor trustee to assume the role when you are gone. After your passing, the trustee would distribute the assets to the beneficiaries in accordance with your wishes, and the Surrogate’s Court would not be involved.

The avoidance of probate is one of the benefits of probate, but there are others that we will look at it in a future blog post.

Attend a Free Webinar!

We go the extra mile to provide learning opportunities through our webinar series. The sessions are very well received, and there is no charge, so you should definitely attend the session that fits into your schedule.

You can see the dates if you visit our Rochester, NY estate planning webinar page, and when you identify the session that works for you, follow the instructions to register.