What is Probate? – Authored by: Anisha D. Rutkowski
Unless you or a loved one has had experience with probate court, you may be unfamiliar with the purpose of probate and the process of probate administration. When a person dies, “probate” is the legal process used by the State of Michigan to handle that person’s estate. This process is administered in the county in which a person resides when he or she passes away.
A person’s probate estate includes that individual’s assets, such as household items, vehicles, real estate, business shares, and bank accounts. Assets that the deceased person owned jointly or assets with designated beneficiaries or successors are generally not included in the probate estate.
One of the first inquiries by the probate court will be whether the deceased individual had a Will. If a Will exists, then its validity will be determined through probate and assets must be distributed according to a valid Will’s terms. However, if no Will exists, the probate court must appoint a personal representative to administer the estate and distribute the assets according to established probate laws.
The probate process can typically take anywhere from six months to several years, depending on the size of the estate, number of beneficiaries, and complexity of the situation. The process provides for paying the deceased individual’s outstanding liabilities and taxes, and allows for a creditor claims period. Court filing costs, along with fees associated with administering the estate, generally amount to five to ten percent of the total estate. In certain situations, depending on the amount of assets in the estate, simplified probate procedures may be used to save time and costs. The best way, however, to avoid this often lengthy and costly probate process is to plan for probate avoidance upon your death.
One valuable tool for avoiding probate is a Living Trust. This Trust is set up during your lifetime and allows you to dictate who will receive your assets, when they will receive them, and who will be responsible for making sure this happens. When you “fund” this Trust during your lifetime, you are effectively transferring certain assets out of your name and into the name of the Trust. Thus, you do not actually own the assets at the time of your death and you can, thereby, avoid probate with regard to those assets. While the Living Trust does not shelter your assets from creditors and taxes, it does provide several benefits in addition to avoiding probate, which we will discuss in future blog posts.