After a person dies, their affairs must be tended to properly. The process of probate allows for this to take place under the observation of a probate court.
Many people often misunderstand probate and think of it as a bad thing. Gaining knowledge about what probate entails may help people in their estate planning process and it may help those who must act as an executor or a personal representative for a deceased person’s estate.
Basic probate activities
As explained by Dave Ramsey, during the probate process, any outstanding debts the deceased person had will be paid. These may include credit card balances, vehicle loan balances, medical bills and more. A final income tax return must also be filed with the Internal Revenue Service.
During probate, all of the assets associated with the deceased person’s estate may be identified. Understanding the available assets helps the repayment of any debts. Once all of the debts are paid, any remaining assets may be distributed to the decedent’s heirs.
What probate covers
According to SmartAsset, some assets may be excluded from the probate process. For example, a life insurance policy or a 401K account would have a named beneficiary. This person would receive the benefits stated by the account upon the death of the original policy or account holder, bypassing probate altogether.
Property, such as a home, co-owned with another person may also fall outside the scope of probate. When the first owner dies, the surviving party assumes full ownership of the property. Other assets identified as payable or transferable upon death may also avoid probate.