Wynn at Law, LLC provides estate planning services – wills are one example. ‘Probate’ is a commonly used term in estate planning, especially these days when many clients have an estate worth more than $50,000. First, a bit on probate… then why $50,000 is an important number.
Probate is a court process whereby a will is legally ‘proven’ as the true last testament of the deceased. Essentially, the document is reviewed and validated. It came to be a more common process in the 16th century when greedy relatives (or non-relatives) began making phony claims on a dead person’s property. It comes from the same Latin roots as ‘probation.’ In probation, a person has to prove he can live within the law… in probate, a document has to be proven to be authentic and created within the law. Probation and probate have nothing else in common other than the root word, meaning proof.
The ruling of a probate court is the first step in resolving all claims and distributing the deceased person’s property in a will. The court officially designates an executor to carry out the will’s instructions. Usually, the executor is named already when the person made out the will. If a will is contested, it happens in probate court.
What else happens in probate?
- Creditors must be notified and legal notices published.
- Homes/property/other possessions may have to be sold off to pay those debts, or otherwise make distributions evenly to the beneficiaries.
- If there is a lawsuit over the death, or the deceased was party to pending lawsuits, those are noted and settled (if possible).
- Estate taxes, gift taxes or inheritance taxes must be considered if the estate exceeds certain thresholds. Working with an estate planner can minimize these.
Some assets, like life insurance, are not counted because they are transferred directly to the beneficiaries and avoid probate. Death benefits are not included in an estate. Living Trusts – usually created to hold large assets – also are excluded from probate. Joint tenants (e.g. husband and wife) are allowed the joint property in a ‘right of survivorship’ if one dies, and this, too, avoids probate. Bank or investment accounts designated Transfer on Death (TOD) avoid probate as well. Real Estate can also be re-titled to avoid to probate, through tools such as a Transfer on Death Deed (TODD).
Here’s where the $50,000 comes into play. For estates in Wisconsin, after all those subtractions, the small estate threshold is $50,000. If the estate is valued below that and there is a will, probate is avoided. If there is no will, or if the estate is more than $50,000, probate is required. Most probate proceedings in Wisconsin aren’t very onerous. They are informal, with no squabbles between beneficiaries and few creditors. This is little more than an application to the court, followed by a summary judgment. A more formal proceeding requires the court to help distribute assets.
Wynn at Law LLC works with clients to secure their assets in a will or trusts to hold up in probate, or avoid it all together.
*The content and material in this original post is for informational purposes only and does not constitute legal advice.