When is full probate necessary?

Key points about the full probate process

• State law dictates whether an estate will go through the full probate process.

• Formal probate proceedings can take up to several years, depending on the state and the complexity of the estate.

• Privacy can be of some concern as probate filings are public record.

• A full probate proceeding can cost 3%-8% of your loved one's total estate value.

• Smaller estates as defined by state law can avoid full probate through a streamlined legal process that does not require a court hearing.

When people talk about probate, it’s rarely in positive terms. It has a reputation for being a complex and expensive administrative process, one that needs to be initiated while you may still be deep in the midst of grieving. Not to mention that discussing finances with family or other beneficiaries may be an uncomfortable topic, or that you may not be well informed about managing financial matters. If your loved one’s assets are not clearly organized or designated, the prospect of the probate process can be intimidating and overwhelming.  

If there is a will

Every will must be submitted to probate court regardless of estate size, but some smaller estates may be able to go through probate using a simplified process. Consulting a probate attorney or another estate management professional before you contact probate court will help you understand your options and make the best financial choices.

If your situation qualifies for a simplified probate process, it will likely be more manageable, both practically and emotionally. But even if it doesn’t, you and your fellow beneficiaries may find some peace of mind and closure knowing that the will’s terms are being followed with the clarity and fairness of the law. 

What does probate do?

Probate is the court-administered process of authenticating and executing a will or, when there is no will, determining who inherits the estate. It includes locating and determining the value of the person's assets, paying their final bills and taxes, and distributing the remainder of the estate to the rightful beneficiaries. 

If you’re the executor, you are usually required to start the probate process within a certain timeframe. This means contacting the court to file the will, an application to open probate of the estate, and a death certificate. Because it is a court-administered process, probate usually requires the assistance of an attorney.

There is no requirement for an asset to go through the probate process; however, if the will includes assets that are not specifically designated to avoid probate, the beneficiaries cannot assume legal ownership of them without it. Probate also generally keeps any bills and debts from accumulating. 

When full probate is required

State laws vary, but the most common reasons for needing to complete a full, formal probate process include the following: 

• The estate is considered large according to state law.

• Any of the person’s assets are listed solely in their name (i.e., without any joint owners or a payable on death designation) and the estate is valued above the state’s specified threshold. Some states make an exception for a motor vehicle.

• The person owned real estate with other listed owners who are not beneficiaries (in most cases these shares need to be probated to transfer ownership to the named beneficiaries).

• The named beneficiaries on a payable on death account or similar type of account (i.e., bank account, health savings account, retirement account, life insurance policy, or annuity) have already died or these accounts have no named beneficiary. 

• Someone died without a will and owned property that needs to be legally distributed.

• A wrongful death is suspected and the matter may be litigated in the future (regardless of estate size).

• There are problems with the existing will, e.g., it was not created according to applicable state law or there are other challenges to its integrity.

Bypassing full probate

Many people choose to avoid formal probate if they can, in part because it can be expensive and thus reduce the amount that beneficiaries receive. Both the attorney and the executor are entitled to separate payments from the estate. The cost of formal probate can range from 3% to 8% of the entire estate value, not counting assets subject to estate tax. 

Moreover, because the court must oversee some portions of the process, transferring property according to the will can take anywhere from a few months to several years. Until the estate is settled, you may not be able to sell property that is part of the estate or take advantage of the proceeds of such a sale.

For very large estates, the formal probate process can take years. What’s more, anyone with a valid claim to any assets in the estate may contest the will or file a petition with the probate court, which could drag the process out even longer. Even small estates can be delayed due to such claims. 

Privacy and intent may also be concerns. Probate filings are generally open to the public, so information about the person’s financial holdings and the beneficiaries’ inheritance become public record. If the will does not meet state legal requirements, the court has to make determinations about the legal distribution of the estate, and these may not align to the original document. 

In addition to financial pressure that may arise, probate issues can inflame tender emotions and bring old pain and arguments into the present. 

Streamlined probate

In most states, small estates (as defined by state law) are eligible for a less formal procedure that falls under the general supervision of the probate court but doesn’t need a lawyer. A procedure known as summary probate requires an executor to submit a sworn accounting of the estate settlement, while affidavit probate requires beneficiaries to submit their own affidavits claiming the assets to which they are entitled. Using one of these processes, an estate can be settled in a matter of weeks or months. 

Some assets don’t go through probate at all, thus reducing the size of the estate subject to probate, which in turn reduces estate tax. These include any accounts designated as payable on death; assets in a trust managed and distributed according to the terms of the trust; life insurance policies; and any asset jointly owned with the beneficiary, such as a house. These provisions must have been made while the person was still living. 

If, after any existing will has been submitted, the estate size falls below a certain dollar value after debts are settled and there are no assets to be legally transferred, some states allow you to skip probate altogether.