Probate is the legal process for transferring property upon death. It is a relatively quick and inexpensive process in Washington and Idaho. The Will is filed with the court, the Personal Representative is appointed and given legal authority to act on behalf of the estate, usually through the issuance of Letters Testamentary. Most probates are called “non-intervention”, meaning the court is not involved in the estate’s administration.
What Are the Costs Associated with Probate?
In addition to filing fees, copy costs and recording fees, the cost of probate mostly consists of legal fees. The Personal Representative may also charge a fee, but if he or she is also a beneficiary of the estate it is not uncommon for the Personal Representative to waive any fee.
Are Beneficiary Designations a Good Probate Avoidance Approach?
Beneficiary designations are used to direct non-probate assets (those not governed by a Will), such as life insurance policies, retirement accounts, and other financial accounts. This is a critical part of an estate plan which is often overlooked.
Are There Any Good Things About Probate?
Yes! Not only does probate make sure assets go where they are directed, it also provides for protection from creditors. And in Washington, it is the only way to protect assets for a surviving spouse against Long-Term Care costs. Assets within a testamentary Asset Protection Supplemental Needs Trust (meaning a Trust created by a Will) are non-countable for government benefits purposes. Plus such assets are not available to creditors, and not subject to the state’s lien for benefits paid to the surviving spouse. A Will with an Asset Protection Supplemental Needs Trust is the best asset protection tool available for couples who wish to ensure the surviving spouse does not become impoverished.
When Is Probate Required?
Assets in the decedent’s name alone, with no joint tenancy and no beneficiary designation, must go through the probate process to determine who is entitled to receive them. If some assets must be probated, that does not mean that every asset the decedent owned is subject to the probate process — only those assets in the decedent’s name alone need to be probated.
An estate of less than $100,000 can be administered through the use of a simple affidavit if the decedent owns no real property solely in their name.
What About Estate Taxes and Probate?
Estate taxes are calculated on all assets that were subject to the decedent’s control just before death. The federal estate tax is due on estates of more than $5,450,000 in 2017. Washington State’s estate tax exclusion amount in 2017 is $2,129,000.
Does that Mean My Children Will Have to Pay Income Taxes on What They Receive from My Probate Estate or Trust
No. Inheritances and gifts are not income to the recipient. Two important qualifications to this broad principle:
IRAs and qualified retirement funds will be income to the recipient when withdrawn, whether that is you or your heirs, and
Inheritances may include some portion of income earned between the date of death and the date of distribution — and that income is subject to income taxation to the recipient.