Probate 411

In a prior posting, we provided a probate 411 of sorts. To continue along those lines, let’s define a couple terms you’ll need to know when contemplating probate:


Executor: This is the person, usually a family member, husband, wife or friend who gets stuck with all of the administrative work of settling an estate. It could involve processing paperwork involved with a 401(k) settlement, writing checks to real estate agents, attorneys, repairmen, and auctioneers, and it always involves a lot of communication. If there’s a will, the court typically appoints the executor named by the deceased. If a person dies without a will – or intestate – the court appoints an executor based on a priority list set forth by the legislature. States may call them something different. For example, they are called “personal representatives” in Colorado. Note that if a trust is involved, there is a "trustee" or several trustees. This is a different role than that of an executor or personal representative.

Assets: Your assets include any real estate that you own, as well as any personal property such as art, cars, an antique collection, stocks (in public or privately owned shares), bonds, business interests, retirement accounts and life insurance policies. Don't forget the digital assets like Pay Pal accounts or monetized blogs, websites, even your email, Facebook and Twitter accounts. Many people believe they have no “estate,” when in reality, they do.

Probate court: This is a division of your county’s court system, complete with clerk’s office, courtrooms, judges and all the record keeping functions.


So now that we have some basics down, let’s answer a few helpful questions.

What passes through probate and what doesn’t?

Assets that typically follow the path of probate include:

• Any asset (financial like a brokerage or checking account or physical like a car or personal residence) that you, as an individual, own outright at the time of your death, and that does not have a beneficiary designation
• Any assets like life insurance or a retirement account that you specified through a beneficiary designation should go to your estate after your death
• Your share of a joint asset, usually in association with real estate or a home, titled in the form of “tenants in common”

To probate or not?
Some people arrange their property so that it completely bypasses probate, using a variety of techniques, such as signing forms on their bank and retirement accounts that cause money to go directly to beneficiaries (other than their estate); gifting assets before death and using revocable living trusts.

Others have all of their assets distributed via probate. To find out what avenue might work best for your personal situation, you might consider speaking with a financial planner who specializes in estate planning, or an estate attorney.

No probate = no taxes = MYTH!
A common myth is that if you can avoid probate, you can avoid taxation. This is not the case. Assets that are part of your probate estate, along with assets that pass outside of probate are considered part of your gross estate. Your gross estate is used to calculate any estate tax you may owe. The only way to completely avoid estate taxation on an asset is to simply not own it or any interest in it at the time of your death.

Even assets that pass to your beneficiaries outside of probate are subject to estate tax. If taxation is a driving force behind your probate concerns, it may be in your best interest to meet with an estate attorney or financial planner that specializes in estate planning to uncover and identify your goals for your estate and design strategies for how to best achieve them.