Probate is the legal process of estate administration. We practice law in Nevada, and in our state, the probate court in the county that the decedent resided in would supervise the process.
In this blog post, we will provide some answers to frequently asked questions about probate.
In an estate planning context, probate exists to provide supervision when an estate is being administered. If the last will is used as a vehicle of asset transfer, an executor would be named to administer the estate. The will would be admitted to probate, and the administration process would get underway.
The court is involved to protect interested parties. To explain by way of example, let’s assume that a friend borrowed $100,000 from you. Unfortunately, he passes away in a car accident before he could pay you. His family does not know about this debt, and they don’t particularly like you.
If there was no supervision, they could just distribute the resources that are contained in your friend’s estate and leave you out in the cold. Probate exists to give creditors a chance to come forward seeking satisfaction. The executor is required to notify creditors about the passing of the decedent.
Another form of protection that is provided by probate is the ability to challenge the validity of a will. There are some instances where challenges are very legitimate, and there would be no window of opportunity if the probate process was not in place.
Intestacy is another situation that can enter the picture when someone passes away without a last will or any other estate planning document. Under these circumstances, the probate court would take control of the situation, and ultimately, the assets in the estate would be distributed under intestate laws of succession.
There are certain types of postmortem asset transfers that are not subject to the probate process. If you have life insurance, the company would deliver the proceeds to the beneficiary directly. The court would have no involvement. This is also true if you have named a beneficiary to assume ownership of the remainder that is left in your individual retirement account after your passing. When you open a bank account, you have the option of adding a beneficiary. This is called a transfer on death or payable on death account. Brokerage accounts also offer this option. When you have this type of account, the beneficiary cannot access the funds while you are alive.
For payable on death accounts, the beneficiary would obtain a death certificate. It would be presented to the bank or brokerage, and the beneficiary would assume ownership of the assets. The court would not be involved.
It is possible to add someone to the title or deed of your home as a co-owner. This is called joint tenancy, and it comes with right of survivorship. If you do this, the person that you add as a joint tenant would become the sole owner of the home after you die. This transfer would not be subject to the probate process.
A revocable living trust is another estate planning tool that is very useful, and it is a good alternative to a last will. You can consolidate assets with this type of trust, and you can instruct the trustee to distribute assets over an extended period of time if you choose to do so. It is also possible to name someone to manage the assets in the trust if you ever become incapacitated.
In addition to these benefits, assets in a living trust can be distributed to the beneficiaries outside of probate. The same thing is true with assets that are in some other type of trust.
There are some drawbacks that go along with the process. It will take close to a year to run its course, and the inheritors do not receive their inheritances during this interim. There are expenses that reduce the amount of the inheritances that will be received, and it is an open proceeding, so privacy is lost.
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