Do all assets, stocks, bonds, property, cash, etc. have to go through probate?
All of your assets do not have to go through probate. Most states allow a certain amount of property to pass free of probate, or through a simplified probate procedure. In California, you can pass up to $100,000 of property without probate, and there's a simple transfer procedure for any property left to a surviving spouse. Real property that passes through joint tenancy or a living trust, outside of the Will, is not subject to probate.
These items, however, must be assessed through the probate process: Assets named only in the deceased person's name must go through probate. One-half of each asset registered as community property in the decedent's name with his or her spouse. The deceased person's portion or share of an asset where the asset is registered as tenants in common with other people; Assets, which are owned but are not registered, such as furniture, jewelry, etc. are appraised during probate. Some assets may be transferred without the need of probate assessment, including any assets held in joint tenancy such as land, property, vehicles, and bank accounts, any asset held in a living trust, most life insurance and retirement benefits.
During probate, you may have to sell some or all of the estate assets to pay taxes, fees and/or debts. The executor or administrator is expected to prepare a budget with an estimate of the federal estate tax, fees for the executor and attorney, administrative costs, cash bequests under the Will, and debts or claims. If there is not enough cash available, then a decision is made regarding which assets to sell. The court has to approve the sale of each asset before the executor or administrator may sell during a probate proceeding. A court order or court hearing may be necessary for different types of assets. If there is enough cash in the estate, then no assets need to be sold, but still can be put up for sale if the Executor determines this is the best course of action to take.
Although some sort of legal process is necessary to transfer legal title from the deceased's name to his or her beneficiaries or heirs, many states will allow some types of property to pass on to beneficiaries completely free of the probate process, or through a simplified probate process. The more clear and precise the Will has been written, the better the chance of avoiding a lengthy probate process, or probate at all.
Probate isn't required if the deceased/author of the Will did not own titled or considerable assets. An administrator is usually appointed to execute the Will if a family member cannot fill this function. The estate shifts to ownership by to the respective state if there is no Will and no executor or family member to execute. Moreover, if no contractual obligation exists for the deceased's half of the real property, land, assets, and so on to automatically go to the joint owner - the Will often names a different beneficiary for his or her 50% of the estate's assets. One of the more common revenue items exempt from probate are life insurance policies, There are also other items, such as annuities, that are tied to contractual beneficiaries and therefore are specifically not subject to probate. There may be a contractual beneficiary on a bank account or trust, for example - also released from having to go through probate.
Real property, land, and certain other assets can also bypass probate, up to a set financial value (as per each state's probate laws). These assets are handled in a more simple manner than probate affords. A Living Trust holding legal title to all or some of the estate's property, naming a specific beneficiary or beneficiaries bypasses probate. A "Totten Trust" naming a specific beneficiary or beneficiaries may also shift assets to the beneficiary or beneficiaries without probate. Other types of benefits, such as a life insurance policy or annuity payable directly to a named beneficiary bypass probate, IRAs, Keoghs, and 401K's transfer automatically, outside probate, to the estate's beneficiaries. POD Bank accounts (i.e., " payable-on-death").
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