Does a Will Always Have to Be Probated?
Does a will always have to be probated? Not necessarily. Probate is the legal process a will goes through if it needs to be validated. Several circumstances might make probate unnecessary, but the rules can vary by state. Many states make other options available, and some exceptions are universal.
Learn the differences between property subject to probate and property that isn't, and learn some circumstances might require a will to go through probate.
Probate and Property Held in Joint Names
People often own assets in joint names with their spouses, their children, or others. If an asset is held jointly with "rights of survivorship," it passes automatically, by operation of law, to the surviving owner or owners.
This means that probate isn't required. The decedent doesn't have a legal right to include their ownership interest in the property in a will or bequeath it to anyone other than their co-owner. If such a provision were included in a last will and testament, the court would not uphold it.
A will that only passes on jointly-owned property cannot be probated.
Probate and Property With Named Beneficiaries
Other assets are "payable on death" to one or more designated beneficiaries and avoid probate for much the same reason. They pass automatically by operation of law to the named beneficiaries. The accounts or proceeds go directly to these individuals.
Many people buy life insurance policies to provide income replacement and a source for paying off their debts when they die. Because these death benefits pass automatically and directly to their beneficiaries under the terms of the policy contract, they don't become part of the deceased's probate estate. Therefore, they cannot transfer them to other beneficiaries according to the terms of a will.
Many people invest in retirement accounts, such as 401(k)s, IRAs, and annuities to plan for their retirement. If the account owner died before using up the entire account for their retirement needs, the account would pass automatically by operation of law to its designated beneficiaries.
If a will only bequeaths property that passes to a living beneficiary by operation of law, the will isn't probated.
Probate and Revocable Living Trusts
If the decedent formed a revocable living trust and funded their assets into the trust, there would be no probate because living trusts are designed to avoid it. They allow a mechanism for assets to pass to beneficiaries under the trust agreement's terms, so probate is not required.
However, some people form trusts and create a will designed to catch any assets the trust maker neglects to place into their trust for one reason or another. This is called a "pour-over" will.
The will is used to transfer any non-designated assets to the trust at the time of the trust maker's death.
A pour-over will creates a need for probate because the assets were not passed on by the operation of law even though they were placed in a trust.
Probate and Small Estates
Probate is required to transfer property out of a deceased individual's name and into the name of a living beneficiary when the asset is not set up to transfer directly by operation of law. There is an exception to this rule that can keep some estates out of probate.
Nearly every state offers a form of abbreviated probate proceeding for small estates valued under a specified amount. Beneficiaries can sometimes claim the deceased's property with an affidavit approved by the court. A surviving spouse or child might take the affidavit to a bank or other financial institution and take ownership of the property under the affidavit's terms.
If your state doesn't offer this option, most provide a summary or simplified probate with less court supervision and fewer legal requirements when an estate is small. Consult with a local estate planning attorney to find out what's available in your state.
The information contained in this article is not tax or legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law. For current tax or legal advice, please consult with an accountant or an attorney.