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| Credit Answers > Debt Resources > Estate Planning > What Is Probate |
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Probate is a legal process that is generally dictated by the laws of the state in which you resided at the time of your death. Probate is aimed at distributing
the assets of your estate after your death. (The deceased person is referred to as the "decedent.")
If you die having left a will or trust, the probate process -- completing the transfer of assets to desired beneficiaries to the extent possible and paying off unpaid debts -- is
likely to move much more quickly and inexpensively. Dying without a will is called dying intestate.
One of the important steps of the probate process is paying any legitimate claims by creditors. These claims include any tax liens or other encumbrances. For example, if you die
with an estate worth $750,000 and owe $50,000 in personal debts, some of the assets in your estate would be used to pay off these debts and your estate's value would decline to
$700,000.
Similarly, if you own a home with a mortgage, your home may be sold to raise the proceeds necessary to pay off a mortgage loan. Any remaining cash from the sale, after transaction
fees, would go to the estate.
Probate is often a messy, drawn-out affair. Rightful beneficiaries need to be identified and located. Competing claims on your estate need to be adjudicated. In some cases, an
estate may require intervention by a probate court to hear competing claims against the estate or similar disputes.
If you own property in joint tenancy, your estate is generally transferred to any surviving tenants and probate may be unnecessary. You may use gifting to reduce the value of your
estate and simplify the time and effort of probate.
You may have a life-insurance policy that pays a death benefit to your beneficiaries and is intended to pay any estate taxes owed on your estate. Proceeds from life-insurance
policies generally skip probate.
You may wish to use the trust- and estate-planning services of a financial institution or a personal legal adviser. Because the cost of probate is often so high and may take a
long time to administer, it pays to have made the necessary legal arrangements ahead of time with a trust officer or legal adviser.
The probate process ends when your estate is fully distributed, and any creditors' claims and estate taxes are paid. Probate is likely to be more time-consuming and expensive in
states where the process consumes more public legal resources.
Size of your estate is not necessarily a determinant in how fast your estate moves through probate. Instead, writing a will or executing a trust is a major way to expedite the
probate process.
The above information is educational and should not be interpreted as legal advice. For advice that is specific to your circumstances, you should consult a legal adviser.
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