Estate Planning: What is Probate?

Probate.jpg

As discussed in the last blog post, one of the primary purposes of creating a revocable trust during your lifetime is so that your heirs can avoid or minimize the cost and duration of the probate process.

Probate Defined

Probate is simply the legal process by which the assets of one individual pass to their heirs after the individual has died. When a person dies and they have a Will, whoever they name as the Executor of their Will has the responsibility of determining if there are any assets in the estate that need to go through the probate process. If so, they are responsible for filing a petition with the probate court to begin the probate process. If there is no will, an interested party—typically an heir—can similarly file a petition with the court to open the probate, but this person does so as an administrator of the estate rather than as Executor, since there is no will and the distribution of assets will be determined by intestacy statutes.

The Probate Process

Practically, the probate process involves filing a series of court documents that are due after a certain amount of time has passed. Most administrators and executors will hire an attorney to handle the court aspects of the probate, while the executor and administrator will do more of the legwork as far as accounting for and distributing the assets once the court has approved. A typical probate will cost the estate at least $2,000 and can go up significantly depending on the nature of the estate and the time needed by an attorney to aid the executor of the estate. The probate process usually lasts about a year before assets are free to be distributed, but it can extend beyond that.

Waiver of Administration

Unlike many States that offer an expedited and much simpler probate process for estates of small value, in New Hampshire there are very few ways to avoid the full probate process and qualify for what is called a Waiver of Administration—and having a small estate is not one of those ways. Thus, even if your estate assets are only valued at $2,000, your estate may still be subject to a full probate that may cost more than your total estate value. For your estate to qualify for a Waiver of Administration you have to meet one of the distribution and executor/administrator combinations described in RSA 553:32, with the most common ways being you are survived by your spouse and the spouse is the sole beneficiary, or you created a revocable trust during your lifetime and named your trust as the sole beneficiary under your will.