What Is Probate -- and How You Can Avoid It

Few things are as traumatic as dealing with the death of a loved one. Just as we're experiencing pain, legal issues hit us: Insurance companies, reading the will, investments — suddenly it's overwhelming. And perhaps the most difficult issue is probate.

Probate? It's crucial in tying up the deceased's affairs. Preparing for the possibility of probate early can lessen the emotional stress and strain on you and your family.

Probate is the process a court takes to conclude legal and financial matters after death. The court will distribute your estate. If there's a will, the court will go by what it says.

But it's often not that simple. For one thing, there may not be a will. So the court appoints an administrator who decides how your estate will be distributed. You can't assume that your spouse and children will automatically get everything or even an equal share.

Probate is lengthy and complex for folks not prepared for it. No will? Many assets? You don't have to be rich to encounter problems, but being wealthy adds complications.

Here's a list of problems and the ways to avoid them:

• Time — Probate can take a long time. If heirs need their inheritance to pay for college or for medical bills, they may have a problem. The problem of time can add steeply to the costs. Expect probate to take from nine months to two years. Complex or contested estates take longer.
• Cost — Even with a valid will, there will be court costs and fees. If there's no will or it's being contested, costs can be higher. In fact, costs can consume between 6 and 10 percent of an estate.
• Lack of privacy — Probate court proceedings are public record.
• Family squabbles — If a will is contested, heirs will have to go to court and retain lawyers. The probate judge appoints an administrator who meets with lawyers to see who has a valid claim. Problems cost time and money and may even go public.

How can you avoid this?

• There are assets that typically bypass probate, such as life insurance, pension plans, IRAs and annuities.
• Smaller estates can bypass probate or go through an expedited probate process. For instance, New York allows a summary probate hearing for estates under $30,000. Other states allow the use of affidavits to take possession of small estates. Check to see how your state handles it, and verify the information with an attorney.
• Joint ownership can help in the avoidance of probate. Assets owned jointly by spouses generally bypass probate: These assets can include homes that parents lived in with both names on the title, as well as joint checking accounts. Basically, if an asset has both names on the title, you can avoid probate.
• Trusts can avoid probate. If you set up a trust, you pass on your estate without going through probate. Trusts can include real estate and investment and bank accounts, as well as vehicles. A living trust can be an effective alternative to a will.

​To avoid probate, families should plan in advance and consult professionals about which financial instruments are best for them.

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