Have you ever wondered how your estate’s assets would be distributed once you are gone? Perhaps you have drawn up a Last Will or Living Trust. But, what if you die without leaving a will or an estate plan? That’s where probate comes in.
It’s the legal way that the estate of the decedent gets settled under the supervision of New York probate court. The whole probate process begins with the appointment of an estate representative or executor — a person nominated by the deceased’s Last Will (usually a surviving spouse/child) or someone appointed by the court if there’s no Will. Once named, the executor will have legal rights to collect and appraise all the assets owned by the deceased estate, pay off accrued debt, bills, taxes, and, eventually, distribute the remaining assets to the beneficiaries or heirs.
Of course, the entire probate process is far more complicated than that. For starters, it can take up to nine months of back and forth in the court, and cost oodles of money in the process. So, why is probate necessary?
The primary goal of probate is to keep fraud at bay once someone dies and allow ample time to probate the will. It freezes the estate so that the judge can ascertain the validity of the Will, as well as make sure that all relevant parties are notified, that all assets have been identified and valued, and that all applicable taxes, bills, creditors, etc. have been duly paid. Not all estates, however, have to go through probate.
When is Probate in New York Not Needed?
When the Estate is a “Small Estate”
If the total value of an estate is under $30,000, it’s taken as per NY law to be a “small estate,” and doesn’t have to go through probate.
When All the Assets are Not Subject to Probate
Certain types of assets are not subject to probate in New York and can be transferred automatically to beneficiaries upon someone’s death. Such assets include joint tenancy assets, tenancy by the entirety, beneficiary designations (life insurance policies, etc.), TOD, POD, and brokerage accounts.
When there’s a Living Trust
If the decedent had drawn up a Living Trust to hold his or her assets, the surviving beneficiaries and heirs would not have to go through the harrowing probate process.
Important Steps in Probate Process
There are three critical steps in the probate process.
Phase I: Petitioning for Probate
This phase starts with filing a petition to the probate court. The objective of this step is to convince the court to issue a decree validating the Will as well as appoint an executor of the estate (if there’s no Will).
- The Will has to be filed in the Surrogate’s Court in the county where the deceased was a resident, and within a statutory period (after the death).
- The petition is a formal request for appointment of an executor. At this stage, all the beneficiaries, heirs, creditors, and other parties are notified as directed by the court.
- Once the court is satisfied with the will, credentials of the executor and all the parties have been notified, it then issues Letters of Testamentary to the personal representative/executor of the estate.
- Creditors have up to seven months to make a claim.
Phase II: Administering the Estate
At this stage, the executor will gather, determined, and make an inventory of all the deceased’s assets — and then submit it to the court for review within six months of his or her appointment. It’s the responsibility of the executor to settle any debt and pay all bills and taxes associated with the estate. Once done, the executor will then file a petition with the court to close the probate.
Phase III: Distribution, and Closing the Estate
Once the court satisfied, it then orders the executor or estate representative to distribute the remainder of deceased’s assets to the right heirs and beneficiaries. The executor is legally entitled to a statutory fee which he or she can take or forfeit.