INTRODUCTION TO PROBATE

When is Probate Required in Idaho?

In Idaho, probate is required if you own any real estate or if you own possessions with a total value of $100,000. The only situation where probate is not required is if you die without any real estate and  you leave total assets of less than $100,000.

In the absence of a Family Trust, there are no exceptions to these rules. Even if your surviving spouse is legally entitled to inherit everything, he or she will still be required to go through probate in order to take over ownership of the things you owned.

When Should Probate Occur?

Failure to start probate quickly will definitely cause things to grind to a halt when your surviving spouse or heirs want to sell or refinance your real estate. Before that, there can also be a problem with bank, stock brokerage, or other similar accounts on which your name appears. There is a risk of those accounts being frozen when the institution realizes that you have passed away. Consequently, where probate is legally required, it is best to have that taken care of as soon after the death as possible.

What is Probate?

Probate typically consists of four primary steps.

First, if you leave a Will, the person named as Executor in the Will submits an application to the probate court for a determination that the Will is your last Will. If there is no Will, then usually your surviving spouse or child will submit a request for the court to determine that such is the case. In either case, the court’s decision will determine who will serve as the Executor (the person responsible to make sure that the rules are followed, the bills paid, and the assets distributed to the rightful heirs).

Second, the Executor then looks for and gathers up all of the property which you owned when you passed away. An Inventory is prepared and filed with the probate court.

Third, after a Notice to Creditors is published in a local newspaper, any debts that you owed are paid by the Executor from your estate. Please Note: Neither the Executor, nor the heirs, will ever be required to pay your debts from their own personal resources.

Finally, your remaining assets are distributed to your heirs in accordance with your Will (or in the manner dictated by Idaho law in the event there was no Will). The Executor usually has some flexibility to determine whether (1) to liquidate assets and distribute cash or (2) to distribute various assets directly to the different heirs without liquidating them. After all debts are paid and the assets distributed, a Final Accounting is prepared by the Executor and filed with the probate court.

Avoiding Probate:

Unfortunately, there is nothing that can be done after a death has occurred to avoid probate.  However, there may be circumstances under which the process might be simplified and even shortened a bit.

But prior to death, there are several steps that can be taken to insure that your loved ones are not required to go through the delay and expense of probate.

The most common — and for most people, the best — method of avoiding probate is to set up a Family Trust. Doing so eliminates the time delay and the expense of having to probate the estate after you pass away. Instead, within a few days after you pass away, the person named in the Trust as the successor trustee will be able to step up and take control of all of your assets.  Then your successor Trustee will distribute the remaining property and possessions to the persons or charities you designated. There are no legal proceedings or court fees, few if any attorney fees, and the whole process is entirely private.

Must Surviving Spouse Go Through Probate?

It is worth noting that the fact that, just because you were married when you died, does not mean that probate is not required. Your surviving spouse does not automatically inherit your property. Because Idaho law permits you to leave your property to a child, a friend, or a charity, a probate must still occur to determine who is really entitled to inherit your property even when you have a surviving spouse.

On the other hand, a married couple who sets up a Family Trust will normally avoid the necessity of two probates — one when the first spouse passes away and a second one when the other spouse dies.

Other Ways to Avoid Probate?

Besides setting up a Family Trust, there are a few other ways to avoid probate.

The property can be set up with a joint tenancy or a life estate form of ownership. Bank accounts and securities investments (stocks and bonds) can designate a “payable on death” beneficiary. A married couple can sign a devolution agreement. Or the property can be given away to friends or family prior to death.

Unfortunately, all of these alternatives usually have significant risks in terms of either exposure to creditor claims, potential disputes with your heir prior to death, or adverse tax consequences upon sale of the property by your heir.

You should confer with an attorney before deciding to use one of these options in order to avoid probate.

How Lengthy and Expensive is Probate?

Although your Executor has the option to distribute some of your property earlier, by law your probate cannot be completed and closed up until at least six months after you have passed away. Most cases can be wrapped up in less than one year.

How expensive is the process? While it may vary depending upon the attorney involved, the magnitude of any creditor claims, and any disagreements which may arise between the heirs, probate can typically run anywhere from as little as about $2,000 to as much as $5,000 dollars including court filing fees, attorney fees, and the cost to publish the Notice to Creditors in the local newspaper.

On top of that, the Executor is also entitled to “reasonable compensation” which will vary depending on the amount of time that he or she is required to spend on the process. And for married couples, these numbers are doubled because of the requirement of a separate probate as each spouse passes away.

While having to go through probate is not the end of the world, it can be easily avoided.  But only if you take the steps to do so while you are still alive.

Daniel Patchin

Benjamin Monaghan, Attorney

Benjamin Monaghan

 

 

 

 

 

 

 

“I just wanted to take a minute to thank you for the help you provided on settling my parents’ estate. We finally sold their house which closed on Tuesday. . . The transaction went through without a single question. The estate is settled and you are largely responsible for eliminating a great deal of stress. It truly was a pleasure meeting and working with you. Thanks again.”

(Craig P., Boise, Idaho)

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