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PROBATE and INTESTACY: What happens to your stuff after you die.

Mar 23, 2011

Many of us have heard of “probate” but don’t really know what it is.  Often it seems to have attached to it some of the same connotations as a disease:  Avoid it if possible.  And it is sometimes possible to avoid probate by use of a trust…… but that’s a discussion for another time.  Here’s what going to happen to your assets when your time comes.


After you die assets that have a title (your home, any other real estate, your car, stocks, bonds, etc.) are still in your name.  However, you’re no longer around to sign the documents necessary to transfer those assets to anyone else.  So your death poses two problems: 1) Who should your assets go to, and 2) How can they be transferred if you’re no longer able to sign the deeds, titles, etc.  The answers to these problems give rise to the need for probate if you have a Will….or intestacy if you don’t.


Probate is the process whereby your Will is administered by a court through your executor.  Your Will and any changes you might have made by means of codicils (codicils are changes or additions to the main body of your will) tell the court to whom you wish your assets to be transferred. Once your Will has been accepted as valid the court authorizes your executor to make those transfers.  In other words, the court places your executor in your place and allows him or her to sign the documents necessary to transfer the titles of your assets to your heirs.   Otherwise there would be no way for titled assets to be transferred out of a decedent’s name.   Assets can be divided into three groups: 1) Real property - meaning any kind of real estate, 2) Non-real property - usually called personal property - that has a title  (vehicles, securities, bank accounts, etc.) and, 3) Personal property that does not have a title (jewelry, cash, furniture, art, collections, etc.)  Your will should tell your executor to whom all of those things should be distributed.   In many states distribution of untitled personal property can be done by means of a simple list referred to in and kept with your Will.   


If you die without a Will you are said to have died “intestate”.   Obviously your assets still need to be transferred to someone.   Once a court is informed that you died intestate it appoints someone (usually called a personal administrator) who will be responsible for finding out what assets you owned and informing the court.  The court then empowers the personal administrator to distribute those assets.  Here’s the problem with not having a will.  The personal administrator must distribute your assets according to the intestacy laws of the state where you were a resident when you died.  Intestacy laws are very general.  They rarely distribute your assets to your heirs in the same fashion you probably would have wished.  In extremely rare cases where no heirs can be found the assets of an intestate decedent can become the property of the state.  For more on intestacy, see a previous post: What happens if I die without a will, i.e. intestate?


If you have much in the way of titled assets your executor might find the probate process fairly long, difficult and in some states or circumstances it can also be expensive.  The executor or personal administrator is usually entitled to charge a fee for his or her work and that fee comes from the assets of the estate before they are distributed.  In some cases these fees can be substantial.  In addition, some estates require the services of an attorney in order to be certain that the various necessary documents are properly prepared and filed.


In many states there are exceptions to what is included in a probate estate.  These exceptions vary from state to state.  Many states allow a limited amount of property to pass to certain heirs free of probate or through a simplified probate process. Some states, for example, exclude from probate any property that is owned as community property by spouses or that one spouse or domestic partner leaves to the other spouse or partner in a Will.  The laws of the state where you reside at your death will determine probate requirements.  For more information consult an attorney in your state who specializes in wills, trusts, probate, elder law, etc.


And finally, other considerations with respect to what happens when you die include the possibility of death taxes (estate taxes and/or inheritance taxes) and the possibility of charitable giving.  See other EstateTalk posts regarding these issues.


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