How Much Does an Estate Have to Be Worth to Go to Probate?
Whether you’re settling your loved one’s final affairs or preparing an estate plan, knowing when probate is required is important.
While probate isn’t the worst thing in the world, it can be time-consuming and costly, decreasing the assets in the estate and testing the patience of your family.
So, how much does an estate have to be worth to go to probate in NY? The answer isn’t as straightforward as you might think.
While the threshold for probate in NY is $50,000, in reality, the probate process is influenced by many things, and the estate’s total value is just one of them. Whether or not your estate actually goes through probate will also depend on the type of assets held within the estate and how they were owned.
Getting familiar with these different aspects can help streamline what can often be a complex process.
UNDERSTANDING PROBATE AND ESTATE ADMINISTRATION
Probate and estate administration are two distinct processes, each serving a specific purpose.
Estate administration is the term used when someone passes away without leaving a will and involves managing and distributing the deceased person’s assets according to state law.
On the other hand, probate refers to the process of validating and executing a person’s will after their death.
While both processes involve settling your loved one’s affairs, not all estates will require probate, while most estates without a will require estate administration.
In fact, depending on the types and quantities of assets held within an estate, an estate with a will may be able to bypass the probate process altogether.
THE THRESHOLD FOR PROBATE IN NEW YORK
In New York, if the estate has assets valued at $50,000 or more, probate may be required.
This threshold is set by the Surrogate’s Court in New York and applies to all assets held solely in the decedent’s name. It doesn’t matter if those assets are tangible, like real estate, or intangible, like bank accounts; they’re all subject to this rule.
However, jointly owned properties or any assets with designated beneficiaries aren’t included in this calculation. Remember, every case is unique, so it’s best to seek professional advice from a probate lawyer who can provide tailored guidance specific to your situation.
ASSETS THAT DON’T REQUIRE PROBATE
You might be surprised to learn that not all assets require probate in New York.
Jointly owned properties, for instance, typically bypass the probate process and go directly to the surviving owner.
Similarly, retirement accounts and life insurance policies with designated beneficiaries aren’t subject to probate either – these assets are transferred directly to the named individuals.
JOINTLY OWNED PROPERTIES
When a property is jointly owned, it often bypasses the probate process in New York since it’s not part of your solo estate.
This includes properties held as joint tenants with rights of survivorship or as tenants by entirety (a form of ownership exclusive to married couples).
This means that upon your death, the surviving owner automatically becomes the sole owner of the property. It’s important to note that tenant rights play a crucial role here, particularly if you and another person co-own a residential property. The surviving tenant has an inherent right to continue living in the property without going through probate.
RETIREMENT ACCOUNTS AND LIFE INSURANCE
As long as you have eligible beneficiaries designated on your retirement accounts and life insurance policies, they will bypass probate and be distributed to your beneficiaries directly upon your debt. That said, it is crucial that you update these beneficiaries as needed to ensure your wishes are carried out accordingly.
For instance, if you have major life events like a divorce or becoming a parent, these are the perfect times to relook at your current estate plan. If there are discrepancies in your plan after you pass away, these accounts will be thrust into the probate process.
THE PROBATE PROCESS
Probate timelines in NY are not set in stone. They can vary depending on multiple factors, such as the size and complexity of the estate and if any disputes arise among beneficiaries.
The executor’s responsibility is to manage these variables effectively. They must:
- File the necessary paperwork with the Surrogate’s Court
- Notify creditors and heirs
- Pay taxes and debts the estate owes, and
- Distribute assets according to the decedent’s will or state law
While it may seem like a lot to handle, they’re not alone in this process. Legal advisors like probate attorneys can provide guidance around tax liabilities and potential disputes amongst beneficiaries.
Probate can be time-consuming and expensive, delaying rightful inheritances and possibly causing rifts between family members. So if at all possible, it’s typically best to avoid it if you can.
One effective way to do this is by setting up living trusts. In New York, any assets placed in a living trust are considered non-probate property and, thus, won’t have to go through the probate process. This allows for faster distribution of assets and ensures that your wishes will be followed more directly than they might be in probate court.
Additionally, beneficiary designations play an important role in avoiding probate. In New York, retirement or investment accounts can have named beneficiaries who receive these funds directly upon your death. Life insurance policies also allow beneficiary designations, so these funds skip the probate process.
CONTACT THE BROWNE FIRM FOR ESTATE PLANNING TODAY
Careful planning with the help of an experienced estate planning attorney can greatly reduce or even eliminate the need for your estate to go through probate. Our attorneys at The Browne Firm can help you sidestep probate by setting up living trusts, ensuring swift asset distribution, and honoring your wishes directly.
Act now to grant your loved ones a hassle-free future. Contact us today for a consultation.