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How Much Does An Estate Have To Be Worth To Go To Probate?

How Much Does An Estate Have To Be Worth To Go To Probate?

We all know death is the ultimate truth, and it is not easy to deal with the probate process that follows. When a person passes away, their assets must go through a legal process known as probate court proceedings before being distributed among their family members.

Sometimes, the process can be time-consuming and expensive. So, the question arises – How much does an estate have to be worth to go to probate?

Well, we can say that it depends on the type of assets the deceased person owns. Generally, probate is required when certain assets, such as personal property and bank accounts, are left behind without a designated beneficiary. Many people don’t truly understand the probate process or how much an estate must be worth to go to probate.

Pace & Associate CPA is here to help you understand the probate court process and aid you in avoiding the process if possible. This blog post will explain how much an estate has to be worth for it to go to probate, as well as discuss ways to avoid the process altogether. So let’s get started.

What Is Probate | A General Introduction

Probate required for the estate of a deceased person, royalty-free photos & images

In Texas, probate is the legal process that involves supervising the management of a deceased person’s estate.

The probate court evaluates and determines the value of all the assets left behind by the deceased individual. The court also ensures the estate settles any outstanding debts and taxes.

After following the necessary procedures, the court can verify the validity of a will, if there is one, and give the remaining assets to the rightful recipients. If a will does not exist, the court will allocate the assets according to the laws of Texas.

Sometimes, the probate court may only approve or appoint an estate administrator. In contrast, in other cases, it may closely monitor and regulate the estate’s transactions to ensure they adhere to the law.

The extent to which the probate court is involved in an estate depends on how the estate was established before the individual’s death.

Pace Associate CPA, the trusted CPA firm in Texas, has a team of experts who can answer any questions regarding the probate process.

How Much Does An Estate Have To Be Worth To Go Through Probate?

Family tax benefit / residential property or estate tax concept :probate stock pictures, royalty-free photos & images

We often hear that bigger is not always better, but unfortunately, that’s not always the case when it comes to estate planning. Generally speaking, if an estate is worth more than a certain amount, it must pass through probate court before its assets can be distributed.

The threshold for a “probate estate” varies from state to state. In Texas, any estate with a net value of over $75,000 must go through probate.

However, certain assets pass through the court, such as life Insurance policies or retirement accounts with named beneficiaries.

Here We Quote An Example

John’s assets include a jointly owned property worth $500,000, a bank account with a payable-on-death beneficiary named $300,000, a life insurance policy worth $100,000, $50,000 worth of assets under a Living Trust, and a solely owned car worth $20,000.

At first, one may think that John’s estate worth is $970,000 and will require probate. However, since the car is his only probate asset, his estate would probably not need to go through probate in most states.

Check your local probate laws, as “small” may differ from state to state.

An experienced attorney can help you determine whether your estate must go through probate and advise you on the best possible action.

Pace Associate CPA specializes in probate accounting services and can provide you with the knowledge and guidance necessary to ensure your estate is handled correctly. Our legal team can help you create a comprehensive estate plan to protect your assets and provide for your family.

Common Assets That Go Through Probate

scales of justice, gavel and small wooden toy house, working with documents, signing contract agreements. Real estate law concept. scales of justice, gavel and small wooden toy house, working with documents, signing contract agreements. Real estate law concept. probate stock pictures, royalty-free photos & images

If the estate is structured properly, probate may not be necessary, regardless of the assets owned. This usually means creating a trust that owns all assets rather than an individual holding them.

Moreover, assets with a specified beneficiary do not typically require going through probate. For example, a life insurance policy with a named beneficiary goes straight to that person without the need for probate.

Probate is required for certain assets, such as a vehicle or home solely belonging to the deceased individual with no co-owners. These assets have only the deceased’s name on their title. Hence they are included in the probate process.

If two people own property as tenants in common and one dies, their share of the property would be included in probate proceedings.

For instance, if a deceased person owned a rental property with a partner, the partner’s share in the property would be probated to decide who would gain ownership in the future.

Even if items don’t have titles, they may need to be probated if they are valuable enough, such as furniture, appliances, household goods, and personal items. Although their combined value may not require probate, they will be included in the inventory of probated items if other assets are being probated.

What Estates Can Avoid Probate In Texas?

Notary's public pen and stamp on testament and last will, royalty-free photos & images

In Texas, certain factors dictate whether an estate or its assets are subject to the complete probate process.

  • Firstly, certain property types are exempt from probate proceedings altogether.
  • Furthermore, if there is no will, the recipients of small estates can submit a small estate affidavit to skip the probate process.

Exempt Property

Do you know what assets are exempt from probate? Well, certain assets are categorized as non-probate assets and excluded from the probate process.

If all the assets of an estate are non-probate, such as jointly titled assets or assets with a named beneficiary, then the estate can bypass the probate process. These assets include:

  • Life Insurance Policies

The deceased person’s life insurance policies with named beneficiaries are not subject to probate for immediate family members. When the beneficiary receives the proceeds from the policy, it is not counted as part of the estate and does not have to be reported.

  • Retirement Accounts

Retirement accounts such as 401(k)s, IRAs, Roth IRAs, and SEPs are also considered non-probate assets in Texas. If these accounts have named or revocable beneficiaries, such as trusts, they will not be subject to probate.

  • Small Estate Affidavit

If an estate qualifies for a small estate affidavit, then the executor or administrator of the estate can skip the probate process and transfer assets directly to the named beneficiaries. To qualify for a small estate affidavit in Texas, there must be no will, and the estate’s value must be less than $75,000.

  • Pay On Death Accounts

If any of the decedent’s estate assets are titled Pay On Death (POD) or Transfer On Death (TOD), these funds can bypass probate and be transferred directly to the designated beneficiaries. These include bank accounts, brokerage accounts, mutual funds, stocks, bonds, etc.

Property Owned As A Joint Tenancy With Rights Of Survivorship

Property jointly owned by two people, such as a house or land, can bypass probate. As long as the deed to the property is held in joint tenancy with rights of survivorship, then when one owner dies, the remaining owner will automatically become the sole owner of the property, and it does not need to go through probate.

Life Estates

Life estates are also exempt from probate in Texas. A life estate is a type of property ownership in which one person has the right to use and enjoy the property during their lifetime. Still, upon death, the remainder of the property goes to another designated individual or trust.

Understanding what assets are exempt from probate and using some of these strategies can save your family money, time, and stress. However, ensuring that any systems you use comply with Texas laws and that all the necessary legal paperwork is filed correctly is essential.

An experienced estate planning attorney such as Pace Associate CPA can help you make sure everything is done correctly. We possess a thorough knowledge of Texas probate law and can assist you in developing an estate plan that meets your family’s needs.

How Long Do You Have to File Probate After Death

Probate Application and Estate Assets Application for Probateprobate stock pictures, royalty-free photos & images

Coming straight to the point, you have four years from death to file probate. The court proceedings must be initiated before that period expires, or family members cannot access the deceased’s assets.

It is not compulsory that you file probate within four years. Some states have different time limits, so it’s essential to know the rules in specific states.

Examples Of Time Limits To File For Probate In Specific States

The deadline for filing a will with the probate court differs significantly depending on the state. Some states have different deadlines than others.

Illinois

After discovering the death, the individual in possession of the deceased person’s will must file the will with the circuit court clerk in the county where the dead person resided within 30 days. Once the will is filed, any person can submit a written petition to the court to start probating the will.

  • New York

Although there is no specific deadline for filing a will with a probate court after someone passes away in New York, it’s advisable to begin the probate process promptly, as it can be lengthy. The will filed with the court is necessary to start the probate process.

  • California

In California, the executor of an estate has 30 days from the date of death to determine if probate is needed and file all the necessary paperwork. If no action is taken within this time frame, any interested parties may apply to have someone appointed to administer the estate.

  • New Jersey

New Jersey has no specific deadline to file a will with a probate court after a person’s death. However, those filing the will must wait at least 10 days after the death before submitting it to the probate court.

  • Florida

In Florida, it is mandatory to submit wills to the probate court within 10 days after a person’s death. If the will is not submitted within this period, it may be revoked and deemed invalid.

Probate can take a long time to complete, regardless of your filing state. Filing all papers accurately and promptly ensures the process goes smoothly.

  • Texas

The executor of a will must begin the probate process within four years of the death of the individual who wrote the will. However, there is no specific time limit for finishing the probate process.

  • Hawaii

The will must be filed with the probate court within five years of the individual’s death. Many states require the executor to file a probate petition during the process. In Hawaii, this petition must be filed within 30 days of the end, or it will be rejected.

No matter where you are located, completing probate and settling an estate can take months or even years. It’s essential to start the process as soon as possible.

You must talk to an experienced estate planning attorney as soon as possible if you are considering a probate case. The sooner you start the process, the better chance it will be resolved before the four-year period elapses.

Wrap Up

It is essential to create a good estate plan, even if the estate is not very valuable, so your loved ones do not have to bear the responsibility of going through probate. Creating an estate plan that is carefully thought out can help your family save time, money and avoid additional emotional stress.

With Pace Associate CPA on your side, you can rest assured that our team of professionals is equipped to help ensure your loved one’s estate is handled efficiently and according to Texas law.

We are here to answer any questions that come up during this challenging time, and we are here to help make sure the process goes as quickly and smoothly as possible. Let us handle the hard stuff while you care for yourself and your family during this difficult time. Contact us today to get started!

FAQ’s

How will these assets be transferred to the named beneficiaries?

These assets will be transferred to the named beneficiaries without going through probate.

What are some examples of non-will assets with beneficiaries?

Some examples of non-will assets with beneficiaries include life insurance policies, pension benefits, retirement accounts, and bank accounts that are “payable-on-death.”

Why should you contact a Texas estate planning lawyer during the probate process?

Contacting a Texas estate planning lawyer during the probate process is highly advisable due to the potential complexities and time-consuming nature of the task. The involvement of significant assets, multiple beneficiaries, and creditors can make it particularly challenging for the average personal representative to handle on their own. Seeking the assistance of an experienced estate planning attorney from firms like Texas CPA can greatly benefit individuals in effectively navigating through this intricate and potentially overwhelming process. By partnering with a skilled attorney, individuals can not only ensure that their legal obligations are met but also alleviate some of the stress and burden associated with probate. This allows them to focus on essential aspects such as grieving, healing, and moving forward during this emotionally demanding time.

How long do you have to file probate after death in Texas?

The executor of a will must begin the probate process within four years of the death of the individual who wrote the will. However, there is no specific time limit for finishing the probate process.

How do assets in a living trust avoid probate?

Assets in a living trust avoid probate through the process of transferring ownership to the trust itself. Living trusts, which can be either revocable or irrevocable, offer an effective method for shielding assets from probate. By transferring ownership of the asset to the trust, it no longer remains under the direct ownership of the deceased individual. Consequently, when the person passes away, their assets held in the living trust do not have to go through the typical probate process in their respective jurisdiction, such as Texas. This avoidance of probate ensures a quicker and more efficient transfer of assets to the intended beneficiaries, minimizing delays, costs, and potential complications associated with probate proceedings.

What are tenancy in common assets and how do they affect probate?

Tenancy in common assets, much like joint tenancy assets, have implications for probate. These assets are jointly owned by two or more individuals, who each hold a distinct and separate ownership interest in the property. If one co-owner were to pass away, their share of the asset would be subject to probate and distributed according to the terms of their estate. On the other hand, the surviving co-owner(s) would retain control over their portion of the asset, which would not be subject to probate. In summary, tenancy in common assets involve shared ownership, but upon the death of one co-owner, their share goes through probate while the surviving co-owner(s) maintain control of their portion.

What assets are exempt from Texas estate probate?

Certain joint ownership structures, like joint tenancy with right of survivorship, allow assets like your home to bypass probate automatically. Similar benefits apply to community property arrangements and certain designated beneficiary accounts, such as payable-on-death bank accounts and survivor annuities. Life insurance proceeds and designated beneficiary retirement accounts also typically avoid probate. Assets in ina living trust, can effectively create a separate legal entity that distributes possessions accordingly, outside the probate court system.

Do all estates have to go through probate in Texas?

Texas that qualifies for simplified probate procedures is $75,000. If the total value of the deceased person’s estate is $75,000 or less, excluding the homestead and exempt property, then the heirs or beneficiaries may be able to use a Small Estate Affidavit to transfer the assets without having to go through the formal probate process.

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