What is probate, and how can you avoid it in Pennsylvania?
Probate is the legal process that occurs after a person dies regardless of whether they had a valid will. In Pennsylvania, if a person creates an estate plan, their property is typically distributed according to their will.
If the person dies without an estate plan in place, state probate laws dictate the distribution of their property and other assets. However, there are ways you can avoid this potentially long and complicated process.
How does probate work?
At its most basic level, probate in Pennsylvania involves two steps: paying off debts and transferring the remainder to beneficiaries. An expedited proceeding can happen for small estates, those where the value is under $50,000, of which real estate and funeral expenses are not included. All other estates must go through formal probate proceedings.
A probate court will appoint someone to handle the estate’s administration, known as a personal representative term which includes executor & executrix. However, in most cases where the decedent has drafted a will, someone has already been designated for that role. Once the personal representative, or executor, is in place, they must take inventory of the decedent’s assets, pay outstanding debts and distribute the rest to heirs, as well as assure that all inheritance taxes are paid.
Estate planning tools that help you avoid probate
Even when an estate is relatively simple, the probate process can be lengthy and complicated. An experienced estate planning attorney can help you avoid the process through these tools: although the following methods do not eliminate inheritance tax.
- Payable-on-death designation: In Pennsylvania, you can designate a beneficiary for bank accounts, including savings and certificates of deposit. Your beneficiary can claim those assets upon your death and avoid probate.
- Joint ownership: Property owned by two or more people can also bypass probate, providing a proper title is in place. The most common forms are joint tenancy with right of survivorship, and tenancy by the entirety. (A term which applies only to married persons).
- Revocable living trust: This legal document is created while you are alive and spells out how you want your assets distributed upon death. However, assets must be placed within the trust and owned by a trustee of your choosing. Because these assets are technically outside your estate, they don’t have to go through probate.
- Gifts: Giving away assets to family members, other loved ones or organizations can significantly lower the cost of probate. However, tax consequences can result for those receiving gifts exceeding $15,000 per year.
Protecting your legacy
Regardless of whether your estate is large or small, if your goal is to pass along as much of your wealth as possible to your heirs, if a knowledgeable attorney can find the best options to meet your needs and administer your estate according to your wishes.