What is probate?
Probate is the legal process through which the court sees that, when you die, your debts are paid and your assets are distributed according to your will. If you don't have a valid will, your assets are distributed according to state law.
Probate is a public process, so any "interested party" can see what you owned, whom you owed, who will receive your assets and when they will receive them. The process "invites" disgruntled heirs to contest your will and can expose your family to unscrupulous people and people that are just plain nosy.
Is probate expensive?
Depending on the situation and the state law involved, probate can be relatively no big deal or it can be expensive. Legal fees, executor fees and other costs must be paid before your assets can be fully distributed to your heirs. If you own property in multiple states, your family could face multiple probates, one in each state in which real property is owned. Because these costs can vary widely from state to state, be sure to get an estimate.
New Mexico has an informal probate procedure that can be utilized that is very inexpensive and can usually be completed in six to twelve months. There is no statutory fee in New Mexico which means that the fees are based on the time involved in completing the probate. Most uncontested probates in which the assets of the estate are located entirely in New Mexico can be handled by an attorney for fees ranging between $3,000 to $5,000 with the actual cost based on the hourly charges necessary to complete the probate. By way of comparison, we are advised that the average probate in California may take 1 to 2 years to complete and the attorney fees are often in the $15,000 to 30,000 range or higher.
Probate is a public process, so any "interested party" can see what you owned, whom you owed, who will receive your assets and when they will receive them. The process "invites" disgruntled heirs to contest your will and can expose your family to unscrupulous people and people that are just plain nosy.
Is probate expensive?
Depending on the situation and the state law involved, probate can be relatively no big deal or it can be expensive. Legal fees, executor fees and other costs must be paid before your assets can be fully distributed to your heirs. If you own property in multiple states, your family could face multiple probates, one in each state in which real property is owned. Because these costs can vary widely from state to state, be sure to get an estimate.
New Mexico has an informal probate procedure that can be utilized that is very inexpensive and can usually be completed in six to twelve months. There is no statutory fee in New Mexico which means that the fees are based on the time involved in completing the probate. Most uncontested probates in which the assets of the estate are located entirely in New Mexico can be handled by an attorney for fees ranging between $3,000 to $5,000 with the actual cost based on the hourly charges necessary to complete the probate. By way of comparison, we are advised that the average probate in California may take 1 to 2 years to complete and the attorney fees are often in the $15,000 to 30,000 range or higher.
Does joint ownership avoid probate?
Not really. Joint ownership can work to avoid probate between spouses. However, joint ownership between non-spouses (e.g parent and child) generally causes more problems than it can solve and should be avoided like the plague.
When you add a co-owner, you lose control. There are also gift and/or income tax problems. Your chances of being named in a lawsuit which really does not involve you and of losing the asset to a creditor are increased. You also have to be careful about accidentally disinheriting some or all of your family.
With some assets, especially real estate, all owners must sign to sell or refinance. So if a co-owner becomes incapacitated, you could find yourself with a new "co-owner" -- the court--even if the incapacitated owner is your spouse.
Will my estate go through probate if I don't have a will?
The primary reason for a will is to assure that your estate passes to your family with a minimum of expense and difficulty. Whether or not you have a will, probate is necessary if the decedent has assets held in his or her name alone (worth in excess of $50,000) which need to be transferred. Therefore coordinating title to the assets of your estate and making sure you complete your beneficiary designations on life insurance, IRAs and other plans consistent with your estate plan will dictate whether probate is necessary. For example, "Joint tenancy" property will pass directly to the surviving join tenant automatically, without the necessity of a probate. Similarly, life insurance proceeds and other similar assets can be structured to automatically pass to the desired beneficiaries. However, this must be done with care to assure that your estate is not subjected to estate tax and passes to the desired family member regardless of the order of death.
When you add a co-owner, you lose control. There are also gift and/or income tax problems. Your chances of being named in a lawsuit which really does not involve you and of losing the asset to a creditor are increased. You also have to be careful about accidentally disinheriting some or all of your family.
With some assets, especially real estate, all owners must sign to sell or refinance. So if a co-owner becomes incapacitated, you could find yourself with a new "co-owner" -- the court--even if the incapacitated owner is your spouse.
Will my estate go through probate if I don't have a will?
The primary reason for a will is to assure that your estate passes to your family with a minimum of expense and difficulty. Whether or not you have a will, probate is necessary if the decedent has assets held in his or her name alone (worth in excess of $50,000) which need to be transferred. Therefore coordinating title to the assets of your estate and making sure you complete your beneficiary designations on life insurance, IRAs and other plans consistent with your estate plan will dictate whether probate is necessary. For example, "Joint tenancy" property will pass directly to the surviving join tenant automatically, without the necessity of a probate. Similarly, life insurance proceeds and other similar assets can be structured to automatically pass to the desired beneficiaries. However, this must be done with care to assure that your estate is not subjected to estate tax and passes to the desired family member regardless of the order of death.