Executors might be pleasantly surprised to find that they won't need to conduct a whole probate court proceeding.
Not all estates need to go through probate. To determine whether or not you'll have to conduct a probate court proceeding for the estate you're administering, you need to look at two factors:
- the kind of assets in the estate
- the total monetary value of estate property
One factor that does NOT matter: whether or not there is a will. An estate may need to go through regular probate even if the deceased person left a valid will.
Kinds of Assets That Avoid Probate
Many common assets don't go through probate. A few examples include:
- real estate, bank accounts, or other assets owned in joint tenancy, community property with right of survivorship, or tenancy by the entirety
- property held in a living trust
- retirement accounts for which a beneficiary was named
- life insurance for which a beneficiary has been named
- payable-on-death bank accounts
- vehicles or securities registered in TOD (transfer on death) form
If the estate consists entirely of assets like these—which is not uncommon, especially if the deceased person had been married a long time and owned most things with his or her spouse—probate won't be necessary.
Total Value of the Property and Whether It's a Small Estate
If the estate you're handling qualifies as a "small estate" under the laws of the state where the deceased person lived, you're in luck. Instead of conducting a regular probate court proceeding, which can be complicated and costly, you'll be able to take advantage of simpler alternatives, discussed below.
But first, figure out whether or not the estate qualifies. Many states don't count assets that wouldn't go through probate anyway, like the ones listed above: most jointly owned property, living trust property, and assets for which a beneficiary has been designated.
You just need to add up what's left—solely owned property for which a beneficiary wasn't named—and see what the total is. State law on what's a "small estate" varies hugely. In Massachusetts, the limit is $25,000 (excluding vehicles), while in California, it's much higher.
Because so many assets may not be counted, even some large estates can take advantage of the special shortcuts for small estates. For example, if a person left behind a $300,000 house that's jointly owned, a $100,000 bank account for which a payable-on-death beneficiary has been named, a $100,000 IRA, and a solely owned car worth $10,000, and some personal and household items, the assets total almost $600,000, but the only probate assets is the car. In virtually every state, its value is unlikely to exceed the small estate limit.
Options for Small Estates
Most states offer one or two alternatives, both of which are preferable to regular probate, for small estates. If the estate you're wrapping up qualifies, your job as executor will be quicker and easier.
Claiming Property With Affidavits
People who inherit property can prepare a simple affidavit (sworn statement) and present it to whomever has custody of the property—a bank, for example—to claim the property. This process can't be used for real estate (with a few exceptions), but it's perfect for assets like bank accounts. There's usually a short waiting period before an inheritor can get property transferred this way.
Simplified Probate Procedures
Simplified or "summary" probate proceedings for small estates are just what they sound like: a simpler version of regular probate. You'll probably be able to use fill-in-the-blanks forms available from the court, and you may not need any advice from a lawyer. Court supervision is minimal; you'll probably just have to file your request and wait for a certain amount of time. Then you'll show the court that you've paid debts and taxes, and you can close the estate.
