Probate gets a lot of negative press. You’ve probably heard stories about how time consuming and expensive it can be. Fortunately, not all property needs to go through this legal process before it passes to your heirs. So, you ask, when is probate not necessary?
The quick rule of thumb is probate is not required when the estate is “small”, or the property is designed to pass outside of probate. It doesn’t matter if you leave a will. Let’s take a closer look at each of these exceptions.
Benefits of a Small Estate
Being small can have its advantages when it comes to probate and trust . Most states recognize the complexity of this legal process is unnecessary for transferring a modest estate. So when the deceased’s remaining property is valued below a state-determined amount, assets can be distributed to beneficiaries without going to court. In California for example, an estate valued at $150,000 or less may not need to go to court. In Nebraska, the threshold is $50,000 or less.
Figuring out if your estate qualifies as “small” only takes a few simple steps.
Total up the value of your “individual” property. This typically includes bank accounts, investment accounts, business interests and houses for sale in fairfield ct real estate. The value of your personal effects, such as electronics and artwork, are also factored in. It’s unlikely more disposable items, such as your shoe collection, will be considered.
Subtract the value of property with a co-owner or designated beneficiary. This topic is reviewed in greater detail in the next section. What you need to know for now is that only assets titled in your name alone, and without a listed beneficiary, go to probate. For example, a life insurance policy with a beneficiary is not included in determining your estate value. Neither does a home held as community property.
Determine your state’s small estate threshold: All 50 states and the District of Columbia have laws governing most aspects of estate planning and probate. This includes setting the value of the estates that must go to probate. Look up your state’s probate laws to determine the exact procedure.
Sometime can be a good idea to open probate even when it’s not required, especially if there are concerns over creditor claims or beneficiary disputes. Before relying on the small estate exemption to probate, it’s important to understand the laws of your state and how your assets are valued. Losing a loved one is a difficult time for family and friends. Don’t leave things to chance.