Two common questions hear are “What is Probate?” and “How do I avoid Probate?”
A loved one can pass away in either “Testate” (with a Will) or “Intestate” (without a Will). Probate is the Court process of naming a Personal Representative who can re-title and distribute the deceased person’s assets in accordance with their Will or the laws of Intestate Succession. Probate starts by filing an application to open probate in the County where the deceased person lived before they passed away. This application will include the original, signed Will if the decedent died Testate. The Court will then issue Letters of Personal Representative which tell the public that the Personal Representative has the authority to act on behalf of the Estate. It will then be the Personal Representative’s responsibility to complete an inventory of the estate assets, pay creditors, distribute assets according to the decedent’s Will or laws of intestate succession, and to make sure inheritance tax is paid.
Any assets which are already titled to a Trust or have a designation to go to a beneficiary, pass “outside” Probate. This means that when the owner passes away, the property is automatically transferred to the beneficiary or follows the terms of the Trust without the need for a Personal Representative to re-title the assets. If the deceased person’s entire estate passes via beneficiary designation or through a Trust, Probate is unnecessary. Many have heard that this is preferable and that they want to avoid Probate. The Probate process has its negatives. By statute, Probate has a minimum waiting period before it can be completed and closed. The Probate process will also incur attorney fees if counsel guides you through the process.
However, Probate isn’t always a bad thing. In some instances, it may cost more to create an Estate Plan which avoids Probate than Probate would end up costing you. What’s more, in nearly all cases neither you nor your attorney need to step foot in a courtroom during Probate. Unfortunately, avoiding Probate doesn’t mean avoiding inheritance taxes. A signed Order from a judge assessing inheritance taxes will still be required, even if you avoid probate.
Something you should be aware of, however, is that just because an asset passes “outside” probate or through a beneficiary designation, that asset isn’t necessarily excluded from Nebraska Inheritance Tax, which is a common misconception. This misunderstanding stems from the fact that a life insurance policy beneficiary designated to anyone other than the decedent is not subject to inheritance tax.
If your loved one has passed away, let the trusted Estate Administration attorneys at Burnett Wilson Law, LLP guide you through the Probate or Inheritance Tax administration process. Give us a call at (402) 810-8611 to get started.