Let’s say that you loan a friend $100,000, and she passes away before she can pay you back. Your friend leaves her entire estate to her family in her will, and you are not mentioned at all.
Would it be fair for her family to receive their inheritances before you are paid? What if you have reason to believe that she did name you in her will, and you question the validity of the will that her family shows you?
Probate is the government mechanism that ensures the legitimacy of the estate administration process. The executor that is named in a will would act as the administrator, and the court would provide supervision during the estate administration proceedings.
A notice to creditors would be posted by the executor, and they would be given time to come forward. Final debts would be paid, and the court would determine the validity of the will. If anyone wanted to challenge the estate, they could present a case during probate.
In addition to estate cases that involve a will, the probate court presides over intestate estate matters.
Uniform Probate Code
As you can see, the probate process serves a legitimate, necessary purpose. However, during the 1960s, people within the legal community saw the need for modernization. The existing laws in many states were archaic, and the process was unnecessarily unwieldy.
In 1964, the drafting of The Uniform Probate Code began in earnest. The objective is self-explanatory to a large extent: the goal was to establish a set of probate laws that would be used in all 50 states.
It took about six years of work, but in 1969, the final version was presented. It was produced by the National Conference of Commissioners on Uniform State Laws (NCCUSL) and the Real Property, Probate, and Trust Law Section of the American Bar Association.
The UPC was amended in 1990, and 18 states are now using it, but Ohio is not among them. Other states are using extracted portions of the UPC, so the work did have wide reaching impact.
Even if the probate process is relatively efficient in a given state, it is a hassle for the heirs, and there are strategic limitations when you record your wishes in a will. If you use a living trust as an alternative, you have more flexibility, and the distributions would not be subject to probate.
In addition to asset distributions through the terms of a trust, there are some other types of transfers that are not subject to probate. When property is owned in joint tenancy, the surviving joint tenant would become the sole owner, and the probate court would not be involved.
You can add a beneficiary when you open an account at a bank or brokerage. This is called a payable on death or transfer on death account.
After your passing, the beneficiary would present the death certificate to the institution, and they would assume ownership of the assets. This would be a probate-free transfer.
Life insurance policy proceeds are paid by the company to the beneficiary, and probate is not a factor. The same arrangement applies to the beneficiaries of individual retirement accounts.
Access Our Free Worksheet
We have prepared an estate planning worksheet that you can go through to gain a more complete understanding of the process. This resource is free, and you can visit our worksheet access page to get your copy.
Schedule a Consultation!
Today is the day for action if you have been going through life without an estate plan. You can schedule a consultation appointment if you give us a call at 513-721-1513, and you can fill out our contact form if you would prefer to send us a message.