What Is Probate, and How Does It Work?

Bridget F. Wall is an advanced planning attorney at Northwestern Mutual.

When it comes to estate planning, there’s a lot to consider—especially if you will be leaving behind assets to your loved ones or heirs.

You may know that a will is where you’ll outline what you want to happen after you pass, including who inherits what. But how can you be sure that your wishes will actually be carried out? And what if you don’t have a will?

That’s where probate comes into play.

Below, we explain what probate is, how it works, and why it’s such an important part of settling an estate. We also discuss key considerations you should keep in mind and offer advice that may help your estate avoid probate altogether.

Probate terms and glossary

Before diving into the specifics of how probate works, it’s important to first understand a few key terms and how they relate to the process. These include the following:

• Decedent: The deceased person
• Estate: The decedent’s money and other assets to be distributed
• Executor: A person named in the will to carry out, or execute, the instructions in the will (This will typically be a family member or close family friend but can also be a third–party, such as a lawyer.)
• Administrator: A person designated by the court to administer a decedent’s estate instead of an executor (This typically occurs only when the decedent didn’t have a will or named executor.)
• Beneficiary: A person (or organization, such as a charity) that should get property or assets in a will or other legal instrument, such as a life insurance policy
• Creditor: A person to whom the decedent owed money

What is probate?

Probate is a legal process designed to settle the decedent’s estate. What this process looks like will vary depending on whether the decedent had a valid will. The probate system oversees the distribution of the decedent’s assets to their new owners. This “court supervised” transfer can be to creditors, heirs or beneficiaries.

Probate with a will

A will contains a lot of important information, including who’s responsible for executing the will (the executor) and who’ll inherit what assets (the beneficiaries).

When there’s a will, the probate process typically works something like this. First, the executor files the will with the probate court after the decedent’s death. The court then reviews and validates the will. Once validated, the executor is legally appointed by the court and allowed to carry out their functions. These include:

• Identifying the decedent’s assets and appraising those assets (when necessary);
• Notifying the decedent’s creditors if the decedent carried any debts and paying off legitimate claims out of the estate’s assets;
• Filing the decedent’s final personal income tax returns;
• Paying any taxes the decedent owes (federal and state income taxes, property taxes, etc.); and
• Distributing the decedent’s assets to any named beneficiaries.

Probate without a will

When a will isn’t present, the estate is deemed intestate. When this happens, the court appoints an administrator to serve the function typically played by the executor. Other key steps—asset identification and appraisal, creditor notification, income tax filing, etc.—mostly stay the same as above.

The big difference lies in the distribution of assets. If the decedent didn’t have a will, the assets of the estate will be transferred to heirs according to the intestate laws of the state in which the decedent lived. While specifics can vary by state, this means that most assets will go to the spouse, children and other immediate family members of the decedent.

The lack of a will—and subsequent dispersal of assets—can sometimes cause disagreements between heirs. This is why creating a will is such an important part of the estate planning checklist—whether you have significant assets, a desire for certain individuals to inherit certain of your assets or simply want to avoid potential arguments.

State probate laws

Keep in mind that probate and intestate laws can vary significantly from state to state. When you start the estate planning process, be sure to check with your local laws and consult a lawyer. Some things that can vary include:

• The timeline for filing a will or estate with the probate court,
• The minimum estate size that triggers the need for probate,
• The scope and depth of the probate process,
• Who’s entitled to receive assets in the absence of a will,
• And more.

Pros and cons of probate

Probate serves an important legal purpose by helping ensure that a deceased person’s will and wishes are carried out. But that doesn’t mean it doesn’t have its drawbacks. Below is a look at the pros and cons that come with an estate in probate.

Advantages of probate:

• Probate ensures the validity of a will: A key part of the probate process involves validating that the decedent’s will is legitimate and valid. This process can protect both the decedent and heirs from a forged, outdated or otherwise illegitimate will.
• Probate allows for the distribution of assets without a will: If the decedent dies without a will, probate still provides a means of distributing the deceased’s assets.
• Probate can help resolve disagreements: If there is a dispute among heirs and beneficiaries, probate offers a legal means of settling these disputes.
• Probate provides court oversight: This helps prevent any potential misconduct or abuse of power by the executor or other individuals handling the estate.

Cons of probate:

• Probate can be time consuming: The probate process can take months or even years from start to finish, depending on the complexity of the decedent’s estate and whether any disputes must be settled.
• Probate can be stressful: The need to be involved in a long process can be stressful for family members who are expecting to get an inheritance. They may have to appear in person or coordinate with a legal representative who is working on their behalf.
• Probate can be expensive: Settling an estate through probate usually includes attorney fees and court costs, such as filing fees, that can quickly add up to thousands of dollars.

Probate is a part of the public record: Because probate occurs as a part of the courts system, it means that the details of the decedent’s estate will become public record—which privacy-minded individuals may not like.

How to avoid probate

If you want to avoid the potentially long time frames and high legal costs associated with probate, there’s good news: There are a number of steps you can take to settle your estate without needing to go through the courts.

Name and regularly update your beneficiaries.

Certain types of assets can avoid probate if you list beneficiaries intended to inherit those assets upon your death. Most commonly, this includes retirement accounts, such as 401(k)s and IRAs, and the death benefit paid by a life insurance policy. Other options include payable-on-death (POD) and transfer-on-death (TOD) accounts (bank and investment accounts, respectively), which allow for named beneficiaries.

Take advantage of joint ownership.

If you share ownership of an asset or account with another person, it will typically transfer to them without needing to go through the probate process. If you and your spouse are both listed on the deed to a home, title of a vehicle, or bank account, your spouse would inherit your share of the property upon your death without triggering probate.

Consider establishing a living trust.

If you place your assets in a revocable living trust, you can name beneficiaries just as you would with a will. Upon your death, the trust would distribute these assets to your beneficiaries without needing to go through probate.

Work with a financial advisor.

Estate planning can be an extremely complicated process. A Northwestern Mutual financial advisor can help you understand your options and reach your specific goals—whether they involve effective tax strategies, ensuring you maximize how much wealth you leave to your heirs, avoiding probate or something else entirely.

This publication is not intended as legal or tax advice. Northwestern Mutual and its financial representatives do not give legal or tax advice. Taxpayers should seek advice regarding their particular circumstances from an independent legal, accounting, or tax advisor.