What is Probate?
Probate is a legal process that takes place after someone dies. It includes:
proving in court that a deceased person's will is valid
identifying and inventorying the deceased person's property/assets
having the property appraised
paying debts and taxes, and
distributing the remaining property as the will directs (or state law, if there's no will)
It's basically a method of transferring ownership from the decedent to the beneficiaries.
Typically, probate involves paperwork and court appearances by lawyers. The lawyers and court fees are paid from estate property, which would otherwise go to the people who inherit the deceased person's property.
How does Probate process work?
Probate usually works like this: After your death, the person you named in your will as executor—or, if you die without a will, the person appointed by a judge—files papers in the local probate court. The executor proves the validity of your will and presents the court with lists of your property, your debts, and who is to inherit what you've left. Then, relatives and creditors are officially notified of your death.
Your executor must find, secure, and manage your assets during the probate process, which commonly takes a few months to a year. Depending on the contents of your will, and on the amount of your debts, the executor may have to decide whether or not to sell your real estate, securities, or other property. For example, if your will makes a number of cash bequests but your estate consists mostly of valuable artwork, your collection might have to be appraised and sold to produce cash. Or, if you have many outstanding debts, your executor might have to sell some of your property to pay them.
In most states, immediate family members may ask the court to release short-term support funds while the probate proceedings lumber on. Then, eventually, the court will grant your executor permission to pay your debts and taxes and divide the rest among the people or organizations named in your will.
Finally, your property will be transferred to its new owners.
Do all property go through Probate upon death?
No. Most states allow a certain amount of property to pass free of probate or through a simplified probate procedure. In California, for example, you can pass up to $100,000 of property without probate, and there's a simple transfer procedure for any property left to a surviving spouse.
In addition, property that passes outside of your will—say, through joint tenancy or a living trust—is not subject to probate.
The main players in Probate are typically,
The executor or personal representative. This person helps administer the estate. They're tasked with facilitating the distribution of assets according to the will (or passing assets to heirs if there is no will) while settling up with any creditors. Executors may receive "letters testamentary," which are papers giving them the authority to deal with financial institutions and other agencies on behalf of the estate. If you're drafting up your own estate-planning documents, make sure you alert anyone you'd like to name as an executor so they aren't caught off guard.
The beneficiaries. These are the folks who will inherit the assets. Relatives who are not named in the will (if there is one) but have some potential claim to the assets may make an appearance, too.
The creditors. They may be notified of the probate proceedings and able to collect debts owed by the estate.
A judge. This person presides over the probate court.
Other folks who may be involved during probate proceedings include an attorney for the executor and representatives of any young children who stand to inherit assets.