The process of settling a person’s will after their death is called probate. Probate is usually handled in court and can be complicated, time consuming and expensive. Fortunately, depending on what the property is and how much the value of a person’s estate is, not everything has to go through probate.
In our previous blog we looked at a few key documents for any estate plan. We will now look at the basics of what does and does not require probate, how property value comes into play and what property may end up needing probate.
Remember that the best way to have a sound estate plan is to work with an experienced attorney. They will look at the unique details of your situation and help you figure out what plan will work best for you.
Types of assets that don‘t require probate
As we touched on above, probate is a slow and potentially costly process. The less of it your loved ones have to contend with the better. These are a few of the most common types of property that will not require probate:
- Real estate, bank accounts and anything else owned jointly by the deceased and another person, such as a spouse or business partner
- Property currently in a living trust
- Life insurance and retirement accounts with a named beneficiary
- Payable-on-death bank accounts
These and similar items will simply go to the designated party; no probate processes required.
How property value effects probate
In certain situations, a person’s estate may qualify as a “small estate” under North Carolina state law. This allows a person’s heirs to receive their inheritance with little or no probate. To qualify, the estate cannot be valued at more than $20,000 after all debts are paid; $30,000 if the deceased’s sole heir is their spouse.
What makes this unique is that only assets that go through probate are considered when calculating whether someone qualifies for a small estate. This means that in an estate holding a jointly owned home worth $500,000, a cabin in a living trust worth $150,000, and a $100,000 life insurance policy with the deceased’s child as the beneficiary, none of the above would not affect the calculations.
Assets that are likely to go through probate
Broadly speaking, property that you solely own, such as real estate or vehicles, must go through the probate process. This is the property that may be hung up in court for weeks or months. With proper estate planning, however, living trusts and other strategies can avoid this.
Nobody wants to leave their heirs waiting to inherit what’s theirs, and they certainly don’t want it to cost extra money. Smart estate planning can stop both of these problems before they start.