February 27, 2021
Probate Administration : Does Probate Vary in Different States?
Does probate vary in different States? How complicated probate process is? Is probate still necessary even if there are no agreements?
Atty. Chris Berry tackles those questions in today’s episode of Daily Wisdom!
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The Core Process and Variation of Probate
Probate does vary to a certain extent in each state, but in reality, it’s relatively the same. In the sense that, how assets end up in probate are going to be the same no matter what state. What’s going to differ is just how complicated the probate process is. But typically what you’re going to have is a core process, it’s going to last a certain amount of time. In Michigan, it lasts at minimum five months, and you’re going to have certain costs associated with it.
You’re going to have inventory fees, filing fees, publication fees, sometimes attorney fees. The national average is 3% to 5% of any assets going through probate typically get eaten up in costs, whether it’s inventory fees, filing fees or publication fees. So most people want to avoid probate. And the way to avoid probate in each state is going to remain the same. And understand, even if there’s no disagreements, you still may have to go through the probate process. So even in Michigan, if there’s no disagreements, everyone is on the same page, but an asset ends up in probate, you still have to go through that five-month process. Where you have inventory fees, filing fees, publication fees.
So the probate process is, how assets end up in probate are going to be the same in each state. And really, what we’re talking about is what’s called a state administration. And this is going to be the same in every state. So first we look at how the assets transfer upon death. That’s what a state administration is. And first, we have what we call joint ownership. So if you’re joint on a piece of property, let’s say you’re a married couple, one spouse passes away, then it’s going to go to the surviving spouse. That’s joint ownership. Joint on a checking account, one spouse passes away, it’s going to the surviving spouse.
Second, would be through, and this is all a state administration. Second, would be through beneficiary designations. So if you have a beneficiary listed on a 401(k), on a IRA, something like that, it would go to whoever’s listed as a beneficiary. Third would be through a trust. So you can have different types of trusts. We could have a revocable living trust. We could have asset protection trusts like the Castle Trust. But if an asset doesn’t go through joint ownership, beneficiary designation trust, then it ends up going through probate. And that process is going to be the same in every state of, how do we avoid probate?
Relying on Joint Ownership Beneficiary Designation or Trust
Well, we need to rely on either joint ownership beneficiary designation or trust, whether you’re in California, Texas, or Michigan. If it doesn’t pass through one of the first three ways, then it goes into probate. Now what’s going to be different is how the probate process works. But most states, you’re going to have this timeframe. In Michigan is going to be five months. And again, the national average is that 3% to 5% of any assets going through probate, you end up in costs. That’s just the national average.
And so if you can avoid probate, chances are you’re probably going to want to do that. And avoiding probate with a basic estate plan is pretty easy. You just rely on beneficiary designations. Maybe you have a trust, and you could do something called a ladybird deed for the home. But again, even if you’re out of state, you’re still probably going to want to avoid probate because you don’t want to have your kids or your beneficiaries having to go through a court process, even if there’s no fighting involved.