Many individuals don’t quite understand what the term “probate” means, but they have a notion that “probate” is something that they should avoid. Avoiding probate is not always a good idea depending on the circumstances of the matter.
Probate is the legal process by which assets of a deceased individual are distributed either according to his or her Last Will and Testament, or by state law if there is no Will (an “administration” proceeding).
When a person dies, his or her assets must be separated into two categories:
- Non-probate: Non-probate assets are any assets for which the inheritors have been specifically named. Some examples are accounts with beneficiary designations, in-trust-for accounts, Totten trusts, or joint assets with the right of survivorship.
- Probate: all other assets in the name of the deceased.
Non-probate assets will pass to the named beneficiary or joint owner by operation of law, and therefore, the Will will have no relevance and will not control those assets. The probate process is only necessary when probate assets are left solely in the name of the deceased without a beneficiary designation. Even then, provided the total value of the assets is minimal and the identity of the heirs can be established, an affidavit may be sufficient to get the assets distributed to the heirs. When a person dies without a Will, his or her probate assets go through an “administration proceeding.” When a person dies with a Will, the probate assets go through a “probate proceeding.”
An administration proceeding is the process by which an heir of the deceased person will petition to the Surrogate’s Court to become the administrator of the estate of the deceased. The individual who may seek to become the administrator is determined by law and starts with the decedent’s spouse, then any of his or her children if there is no spouse, and so forth. If approved by the Surrogate, the administrator will be issued “letters of administration” as proof of his or her authority to handle the estate of the decedent. The administrator is often required to file a bond as a condition of being appointed. Once appointed, the administrator is responsible for getting an employee identification number (EIN) for the estate, opening an estate account, locating and collecting all estate assets, paying debts and income and estate taxes if any, and then distributing the remaining assets according to a list provided under state statute. For example, in New York (similarly elsewhere) if the decedent is survived by a spouse but no children, the spouse will get all of the assets. However, if the decedent is survived by a spouse and children, the spouse will get first $50,000 and the remainder will be divided and distributed 50% to the spouse and 50% to the children.
A probate proceeding is the process by which a deceased person’s Last Will and Testament (“Will”) is proven to the Surrogate’s Court to be valid, after which the terms of the will are legally enforceable. The process entails the following:
- Filing the original Will with a verified petition for letters of testamentary to the Surrogate’s Court in the county where the deceased person was domiciled;
- Providing notice to any and all individuals who would inherit from the deceased if there was no Will. This gives those individuals an opportunity to file objections as to why the Will is not valid and/or why the nominated executor should not be authorized to carry out the instructions of the Will;
- Once the nominated executor is appointed, he or she will receive “letters of testamentary” as proof of his or her authority to handle the estate of the deceased;
- The executor is then responsible for getting an employee identification number (EIN) for the estate, opening an estate account, locating and collecting all estate assets, paying debts and income and estate taxes, if any, and then distributing the remaining assets according to the decedent’s Will.
For individuals with assets in another state, an administration or probate proceeding may have to be initiated in the other state (an “ancillary probate”) as well as in New York. The best way to avoid probate is to have all assets held by a living trust, whether revocable or irrevocable.