Probate. It’s a scary word for many people. But we fear what we don’t understand. At better understanding of what probate is, why we need it and some simple ways we can avoid it can take away that fear.
What is Probate? And Why Do We Need It?
Simply put, probate is the process we use to transfer ownership of something from one person (the deceased) to another person (the heir or will recipient). If Donny owns a car and has given it to Henry in his will, the DMV will require us to go through the probate process to put ownership of the car in Henry’s name. Similarly, if Donna has a checking and savings account and dies with no will, the bank will require her children – her heirs by law – to go through the probate process to get access to those bank accounts.
Is Probate Expensive?
The costs of probate vary from state to state. In Tennessee, it varies from location to location. Some jurisdictions allow lawyers to charge a percentage of the estate value, while some require lawyers to get their hourly fees approved. It is not uncommon for the full probate process – even in the simplest of cases to have attorney’s fees and court costs of a few thousand dollars.
With almost any probate process, there are going to at least be attorney’s fees and court costs. While it may seem tempting to go and find the cheapest attorney to get you through the probate process, the process can be complicated and should be navigated by an attorney that has experience with the probate process in your state. It may also save you money in the long run if the attorney knows some quicker – and therefore less expensive – alternatives to the full probate process.
Tennessee has two such options. For estates under $50,000, you can use a “Small Estate Affidavit” to navigate the process. And for those estates that only have real estate, there are two options depending on the details of the case. One is an Affidavit of Heirship that can be filed in the Register of Deeds Office of the county where the property is located, the other is a Muniment of Title proceeding that essentially records a will and transfers ownership to those named in the will.
Are there alternatives to probate?
Given all of the confusion and fear around probate, a question that’s often asked is “Can I avoid it?”. The answer is: maybe. There are many mechanisms that will allow assets to transfer without going through the probate process.
One option is a trust. This can be a complex discussion and is more suited for a more in depth post, but for the purposes of this article, a revocable living trust is a great way to avoid the probate process and pass assets outside of probate at your death. But there are other options too.
One great way to avoid the probate process is through beneficiary designations. Many retirement and investment accounts will allow you to name a person the account will automatically go to at your death. This process completely avoids probate proceedings.
Also, your bank accounts will allow you to name a “Payable on Death” or “POD” recipient. At your death, this person would simply produce a death certificate to the bank and would receive your account.
There are also many assets, including vehicles and real estate that allow you to name a person “with rights of survivorship”. This means that at your death, the property would transfer to the other person. Keep in mind that also means that if they die before you, the property would revert solely to your name.
Finally, Tennessee allows a person to deed real estate to another individual or individuals and retain a “life estate”. A life estate allows you to live on and use the property until your death and at your death the property will transfer to the person or people named.
While many people get a pit in their stomach at hearing the word “probate” it doesn’t have to be that way. If you properly prepare you can minimize the headache of probate for your family and loved ones.
Lee McVey is an attorney licensed in Tennessee and Virginia dedicated to serving citizens throughout both states. Based in the Tri-Cities, The McVey Law Firm offers Zoom and telephone appoints and a process designed to achieve clients’ goals as efficiently and effectively as possible. Book a consultation today.
If you want more information like this – and some fun articles too! – sign up for our newsletter here and get our estate planning checklist free!