What is probate?
Probate is the court-managed process of settling an estate. The court oversees the process from start to finish. First, the court will review the will, if there is one, and appoint a personal representative(person who has authority to act on the estate’s behalf). Second, the personal representative must file accountings to the Commissioner of Accounts, a lawyer who has been appointed to conduct oversight on the estates in a particular jurisdiction. The paperwork that must be submitted to the Commissioner of Accounts is very detailed and must include copies of bank statements and other documents which show where all estate assets are held. This accounting occurs annually until the estate is settled. Each accounting costs a fee which has to be paid to the Commissioner of Accounts.
The Commissioner of Accounts serves as an auditor to ensure that estate funds are handled appropriately and settled prior to the closing of the estate. The process can be somewhat onerous.
What estates or assets are subject to probate?
The probate process is not required for any assets that:
1) Are held in trust
2) Are transferred via POD (payable on death) or TOD (transfer of death) accounts
3) Transferred directly to a beneficiary (such as a401k or IRA)
4) Held within a small estate, defined as not exceeding $50,000 in assets. (Virginia has a streamlined process for smaller estates).
What is the cost of probate?
There is a cost between $0 and $30 dollars for the court to review and qualify the will and also to appoint a personal representative.
The accountings to the Commissioner of Accounts are more costly with the initial filing fee costing from hundreds to thousands of dollars depending on the size of the estate. The subsequent accountings can cost up to $275 each time(required annually). Click here to see the fee schedule in place now.
A bond is often required to be posted by the personal representative which also requires an annual security fee to the bond company (the amount depends on the size of the bond which is determined by the size of the estate).
What are the pros and cons of allowing my estate to go through the probate process?
The probate process can be costly and frustrating, especially for medium to large estates. All wills presented to the court for probate also become public record, so they can be viewed by anyone. However, thousands of estates go through the probate process regularly. If you decide that you do not want to create a trust, the best option is to make sure that as many assets as possible are not subject to the probate process(such as by setting up POD/TOD accounts where assets transfer directly to your desired beneficiary or beneficiaries).
Contact Lisa Mathews to schedule your free consultation today at (866) 980-0838.