Trusts & Estates Law
Frequently asked questions regarding probate
What does it mean to probate an estate?
Probate is the court supervised legal process by which the ownership of assets is changed from the decedent’s name to a beneficiary’s name. If a decedent dies with a will (meaning, the decedent dies testate), then the probate process will include establishing the validity of the will. If the decedent’s will is valid and the decedent has made no other provisions for his assets (such as payable on death, transfer on death, or joint tenancy with rights of survivorship), then his assets will be transferred to the persons specified in his will. If a decedent dies without a will (meaning, the decedent dies intestate), the probate process will include legally determining the decedent’s heirs-at-law and who is entitled to his property.
How long does it take to probate an estate?
By law, an estate that is being probated is required to publish notice of probate in a newspaper of general circulation once a week for two consecutive weeks. Creditors have four months from the date of the second publication to file claims. Therefore, the shortest period of time in which an estate can complete the probate process is about four and a half months. However, the amount of time required to complete a probate varies greatly and depends on many factors includling the claims of creditors, the types of tax returns that need to be filed, and the nature and extent of property to be sold or distributed.
How much does it cost to probate an estate?
Attorney fees for probating an estate are limited by the Iowa Code. Attorneys may receive up to approximately 2% of the decedent’s gross estate. A decedent’s gross estate does not include life insurance with a designated beneficiary. In rare instances, an attorney can request and receive additional fees for extraordinary work done on an estate. All fees are subject to Court approval.
How can I avoid probate?
Some clients wish to avoid the probate process all together. There are a few different ways to avoid probate, but it should be noted that avoiding probate does not avoid the payment of estate or inheritance taxes or debts to creditors. Avoiding probate simply means not having to go through the probate process in the courtroom.
One of the most common tools for avoiding probate is the use of a revocable trust. An individual creates a revocable trust agreement and declares herself trustee of her trust. All assets of the individual must be transferred into the revocable trust’s name. The trust instrument declares how the assets are to be handled during the creator’s lifetime and disbursed upon the creator’s death. Then, upon the death of the creator of the trust, the successor trustee nominated in the trust instrument will handle the process of transferring the assets to their intended beneficiaries. If handled correctly, a revocable trust can allow an estate to sidestep the probate process. A great deal of attention should be paid, however, to assuring all assets have been transferred to the trust. Forgetting to transfer just one asset into the revocable trust can cause the entire estate to be subject to probate.
Probate can also be avoided for certain property (such as brokerage accounts, bank accounts, retirement plans and IRAs) by designating a beneficiary of such property. Alternatively, one or more persons can be added to the title of some types of property as joint tenants with rights of survivorship. This type of probate avoidance results in a “survivor takes all” succession plan, and can also result in unwanted gift tax liability.