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Probate 101 - How it really works

What exactly is the Probate process?

When a family member passes away and they leave assets and debts to be accounted for, probate is the financial tally of what's left behind. In other words, Probate is the legal process that ensures all outstanding bills, unpaid taxes, and outstanding debts are paid. Distribution for the remaining assets are directed by the last Will and Testament (or by state law in the absence of a Will).

What actions are taken in the process?

  • Executor Appointment is made -- This will be a person who makes sure that the Will (planned legal document) is fulfilled.
  • Manages all the estate assets -- including financial accounts, personal property, and real estate --and approves the final distribution of the estate
  • Certifies creditor claims against the estate and confirms debts are settled

How Long Does Probate Take?

Generally, the assets left behind by a deceased family member can take months at minimum to settle. Each state has a defined process and timeline that creditors must follow in making claims when someone has died. However, the window for potential beneficiaries of the Will to contest the distribution of assets is typically short in most states. This is to reduce the number of long, drawn-out court proceedings around asset distribution.

Here is more information on Missouri's Probate Laws.

What Taxes Must Be Paid?

A tax is a tax. You're not required to pay a separate state death tax or Missouri State estate tax, however, you must pay:

  • The final income tax return of the deceased person
  • Any outstanding personal property taxes owed
  • If there's sufficient income, an income tax return for the estate
  • Any death transfer tax incurred from probate asset transfers at death (ex. Life insurance)

What Assets Go Through Probate?

The following are probate assets:

  • Bank accounts in the deceased's name that have no co-owners nor beneficiary designations
  • Stocks and bonds in the deceased's name
  • Property that's owned by both individually and/or co-owned
  • Tangible possessions (ex. Vehicles registered in the deceased's name, furniture, clothing, jewelry, etc.)

Which Assets Won't Go Through Probate?

Some assets avoid probate and instead go directly to the designated beneficiary or co-owner. In Missouri, this includes:

  • Property in a revocable living trusts -- a trust that can be returned to the initial trustee after the trust-maker has passed
  • Property that's co-owned (by married couples) with a right of survivor-ship or tenancy by the entirety
  • Life insurance policies and retirement accounts with a designated beneficiary
  • Bank accounts with a Payable on Death (POD) or Transfer on Death (TOD)
  • Vehicles with multiple names on the title

The Benefits of Probate

While being in probate can make families anxious-- particularly because it can be time-consuming --this legal process can ultimately bring peace of mind. Probate ensures their family member's post-death wishes are executed, and also provides legal protection to heirs and beneficiaries.

Get answers to your probate, estate questions. Contact TdD Attorneys at Law.

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