What is Probate? by Lee F. Hediger

Probate refers to the legal process of settling an individual’s estate after their passing and distributing their property and assets to heirs and other named beneficiaries. Generally, the court will follow the directions contained in a decedent’s will when deciding how to distribute assets to beneficiaries and name guardians for minor children. However, when a person dies without a will, the courts will follow the intestate laws of the state where the individual lived to determine how to distribute the deceased’s assets. While it is important to have a will and document your wishes, it is also critical that you prepare for the various challenges and issues that can arise during the probate process.

Assets that are Not Subject to Probate

Property and assets you own during life and have named a beneficiary to receive at your death, including those titled as “joint ownership with rights of survivorship”, will typically avoid probate. For example, bank and brokerage accounts, 401(k) and IRA retirement accounts, life insurance policies, and certain trusts require owners to name beneficiaries to automatically receive these assets upon the owner’s death. It is important you review these designations regularly to ensure they are up-to-date and consistent across all your legal documents, including your will. Should the beneficiaries named on these assets differ from those identified in your will, the courts will generally rule in favor of the asset designation.

Disadvantages of Probate

• Lack of privacy. Probate requires numerous court filings, which can make the proceedings and the contents of an individual’s will public record.
• Time Consuming. The probate process can take several months, or even years, to complete. As a result, beneficiaries may have to wait a long time to receive distributions of money and assets required to maintain a family home, pay medical bills or take care of surviving family members. Moreover, the probating of personally owned stock in closely held corporations can cause irreparable harm to family-owned businesses and companies for which there are non-family owner-partners. In both cases, business assets may become frozen during the probate process, leaving family members and/or non-family partners without access to needed funds.
• Depending on where a decedent lived and the location of their property, probate costs can be significant. In most instances, those costs along with attorney’s fees, will be paid from the decedent’s estate, thereby reducing the amount available to beneficiaries.

How to Avoid Probate

With proper planning, it is possible to avoid the public, time-consuming and costly process of probate.  A financial planner can help you understand the various strategies and tools available to ensure your assets are passed directly to your heirs as you intended, including proper titling of assets, naming beneficiaries on insurance policies and retirement accounts and making use of trusts to hold and distribute assets outside of probate.

About the Author: Lee F. Hediger is a co-founding director with Provenance Wealth Advisors (PWA), an Independent Registered Investment Advisor affiliated with Berkowitz Pollack Brant Advisors + CPAs and a registered representative with PWA Securities, LLC. He can be reached at the firm’s Fort Lauderdale, Fla., office at (954) 712-8888 or info@provwealth.com.

Provenance Wealth Advisors (PWA), 200 E. Las Olas Blvd., 19th Floor, Ft. Lauderdale, FL 33301 (954) 712-8888.

 Lee F. Hediger is a registered representative of and offers securities through PWA Securities, LLC, Member FINRA/SIPC.

 This material is being provided for information purposes only and is not a complete description or a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the preceding material is accurate or complete. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.

Any opinions are those of the advisors of PWA and not necessarily those of PWA Securities, LLC. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of PWAS, we are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional. Prior to making any investment decision, please consult with your financial advisor about your individual situation.

To learn more about Provenance Wealth Advisors services click here or contact us at info@provwealth.com

Updated  November 4, 2024