Understanding and Avoiding Probate in Pennsylvania

Proper estate planning can help loved ones avoid lengthy, tedious and expensive processes after someone passes away. However, it requires careful planning, which comes with knowledge and experience. You have several choices, each with unique benefits and downfalls. Regardless of the options you choose or combine, the most important thing is understanding how each works and planning your estate according to your needs.

This guide can help you understand what probate is and how it works in Pennsylvania. You’ll also learn why avoiding probate is sometimes beneficial and the strategies you can use. While you can plan your estate on your own, partnering with a professional has many advantages.

What Is Probate in Pennsylvania?

Probate is a legal process used to administer the estate of a deceased individual, also called a decedent. The process allows the court to oversee the assets of the decedent. Collectively, these assets are referred to as the person’s estate. The court appoints someone called an executor or administrator to handle the affairs of the estate and distribute assets to the beneficiaries. If the decedent passes with a valid will, which is called testate, the assets are distributed according to the terms of that will. However, if the decedent passes intestate, or without a will, the assets are distributed according to Pennsylvania intestacy laws.

Not all assets are subject to probate. Non-probate assets, such as jointly owned property or accounts with beneficiaries, transfer directly to another person without court involvement. Probate assets do not have joint owners or beneficiaries. The executor or administrator is responsible for the probate assets during the probate process.

The probate process begins after the decedent passes. As part of the process, the executor or administrator inventories the probate assets and provides a list to the Register of Wills and beneficiaries. After the final order, the decedent’s debts and liabilities will be satisfied, and the remaining assets will be distributed according to law.

When Is Probate Required in Pennsylvania?

Generally, probate is required when a person dies, leaving behind assets in their own name without designated beneficiaries. In other words, the decedent must own the probate assets at the time of their death. Depending on how the decedent arranges their properties, the beneficiaries can avoid probate, saving time and money.

How Long Does Probate Take in Pennsylvania?

The probate process can take several months or years, depending on many factors. For example, the probate duration can increase when the decedent dies testate and the will is contested. Similarly, when the decedent’s estate is complex, the time for getting probate can be extended. Other reasons for delay could be administrative, like backlogs or filing errors.

How Much Does Probate Cost?

There is no fixed cost for probate. It depends on many factors, such as the size of the estate and whether the decedent died making a will. Some of the expenses you may incur during the probate process include the following:

• Court fees: Probate courts charge fees for the process, which can vary depending on the estate size.
• Attorney fees: Attorneys can assist you through the complex probate process for a fee, which varies depending on the firm or attorney.
• Compensation for executors: In most instances, the estate compensates the executors for their time and efforts.
• Creditor notice fees: The executors or administrators must file notices in the local newspaper to alert beneficiaries and creditors of the probate. Such announcements typically come at a cost.
• Probate bond: Unless expressly stated in the will, the court may require a fiduciary or executor bond to guarantee that the fiduciary will perform faithfully and honestly.
• Other professional expenses: There could be other professional expenses, such as appraisers and land surveyors, depending on the circumstances.

Reasons to Avoid Probate

Here are five reasons why you should avoid probate:

1. Time Consumption

The probate process can take months or even years to complete, especially when the estate is complex or when the will is contested. Assets can sometimes be frozen until the disputes are settled. This can keep heirs waiting for long durations. In addition to the time-wasting, the probate process can be stressful.

2. High Cost

Getting probate comes at a cost. Besides paying attorneys to help simplify the process, you may also incur administrative charges. Again, depending on the nature of the estate, you may have to pay estate taxes after settling debts owed to creditors.

3. Lack of Privacy

When an estate goes through probate court, the details become public records. The process reveals personal information, like the amount of debt owed and to whom. The public may also learn about the estate’s worth, beneficiaries and any disinherited family members.

4. Potential for Conflict

The probate process sometimes results in disputes. Family members and beneficiaries may contest the validity of wills and dispositions, causing unnecessary conflicts and confusion. Avoiding probate can provide clarity and simplify asset distribution. Asset transfers outside of probate are mostly fast and private, so there is little room for people to raise objections.

5. Complexity

Navigating probate can be challenging. The process is sometimes complicated, especially when the estate itself is complex. A classic example is when a person dies partially testate and intestate. The decedent’s will may cater to the distribution of certain parts of the estate, while intestacy law handles the rest. Also, when the will is contested, a relatively simple probate process can become complicated. For that reason, many people employ estate planning techniques to bypass probate.

Ways to Avoid Probate in Pennsylvania

Here are eight ways to avoid probate in Pennsylvania:

1. Revocable Living Trusts

A revocable living trust or living trust is an arrangement where a person holds property on behalf of another. The property holder, usually called the trustee, can be an individual or legal entity. The beneficiaries can also be a natural person, such as the decedent’s child, or an artificial person, such as a corporation recognized by law as a fictitious person.

The asset is transferred to the trustee, who manages it according to the terms of the trust. When the property owner passes away, the property transfers to the beneficiary without going through probate proceedings.

Living trusts are relatively straightforward. However, the assets are subject to liabilities like debts and taxes.

2. Joint Ownership

Creating a joint ownership with the right of survivorship is another way to avoid probate. In this sort of arrangement, two or more persons own the property. When one dies, the surviving persons retain ownership of the assets. This continues until the last surviving person takes full ownership of the property.

There are different types of joint ownerships with rights of survivorship. These are:

• Joint tenancy: This involves multiple owners with equal shares.
• Tenancy by the entirety: This involves married couples, where each spouse owns an equal share of the property.

Joint ownership requires the parties to have robust documentation in place. The arrangement is also subject to taxes and can create contention between parties when improperly done.

3. Payable-on-Death (POD) Accounts

Designating a payable-on-death for your bank accounts can help you avoid probate. You can do this on savings accounts or certificates of deposit. The arrangement allows you to control the money in the account until it transfers to the beneficiary after your passing.

You can spend the money in the account during your lifetime without restriction since you are the legal owner. After death, the beneficiary can claim the account directly from the bank without going through probate proceedings.

4. Transfer-on-Death (TOD) Securities

Pennsylvania law allows registered stocks and bonds to be transferred after death but does not allow TOD deeds for real estate or vehicles. If you register an account in the TOD form, the named beneficiary will inherit the money in the account automatically after your passing. There is no requirement for probate. All transactions are done between the beneficiary and the brokerage company.

5. Retirement accounts

Designating beneficiaries to retirement accounts like 401(k)s, 403(b)s, and individual retirement accounts (IRAs) can help you avoid probate. When you open a retirement account, the paperwork may require you to name one or more beneficiaries to inherit proceeds from the account. The financial institution will pay any beneficiaries directly when the account holder passes.

6. Life Insurance Policies

Like retirement accounts, proceeds from life insurance policies can avoid probate when there is a named beneficiary. There are various types of life insurance policies, including:

• Universal life insurance: The premiums paid, less fees, are deposited into a policy account that earns interest. The policy continues as long as there is sufficient cash to pay the insurance charges. The coverage is flexible, allowing you to raise or lower the premiums at different points.
• Term life insurance: The coverage is for a set duration and pays the beneficiaries only if the policyholder dies within that term. This type generally offers the largest immediate death protection for premiums paid. Most term insurance is renewable for further periods even when health status changes, but the premiums will likely increase each time.
• Whole life insurance: The coverage protects the policyholder as long as they live. The premiums are generally less than term life premiums if you keep renewing the policy. The coverage develops cash values such that if you stop paying the premiums, you can take the cash or use the cash value to buy continuing insurance coverage for a limited period or a reduced benefit.

7. Asset Gifting

The general rule is that only assets in the decedent’s name undergo probate. Therefore, if you gift the property to another person during your lifetime, the beneficiaries avoid going through lengthy and expensive probate processes. Gifting assets during your lifetime can also help reduce the taxes and overall value of your estate.

The limitation is that the strategy only works when you gift the property during your lifetime. If you make a will and name someone as the beneficiary after death, the property will still go through probate.

8. Small Estate Procedures

Small estates go through a simplified probate in Pennsylvania. The process is called a settlement of small estate on petition and is reserved for assets with a total value of $50,000 or less. To take advantage of this procedure, the executor must make a written request to the court to allow them to transfer the assets without going through the entire probate process.

Although beneficial, the small estate procedure has some limitations. For example, executors must go through the entire probate process where the assets include real estate, regardless of the property’s value. Also, financial institutions can only release a limited amount to surviving family members without approval from the probate court. Once the amount exceeds the limit, you must go through probate.

Benefits of Professional Guidance When Working With Probate in Pennsylvania

Here are seven reasons why you should seek professional guidance when planning your estate in Pennsylvania:

• Expertise and knowledge: Attorneys have the experience and training to arrange your assets such that you avoid probate and massive taxes.
• Tailored estate planning: Every estate planning is unique. Each person has different assets and demands, requiring you to plan strategically. With the help of estate and probate attorneys, you can arrange your assets according to your needs.
• Error prevention: Errors can cause delays or sometimes invalidate processes. Partnering with an experienced attorney helps you prepare accurate documentation to carry your intentions into reality. You can avoid the common estate planning mistakes altogether.
• Tax planning: How you plan your estate can affect your tax liabilities. When you work with professionals, you can reduce your taxes while ensuring the assets are appropriately distributed.
• Family dispute mediation: Proper estate planning provides certainty, which can reduce or eliminate family disputes and confusion.
• Document preparation: Estate planning requires you to prepare different documents, most of which must meet specific legal requirements. Estate attorneys can ensure you have all the paperwork in place.
• Peace of mind: Attorneys can take the load off your shoulders, allowing you to focus on other essential things. Estate planning can be complex and stressful, so getting professional help seems excellent.

Why Choose MPL Law for Your Estate Planning

In addition to knowing the law, estate planning requires considering factors such as asset complexity and relationships. That is why it is crucial to partner with a law firm that is ready to listen to you to understand your needs.

MPL Law Firm is a relationship-based law firm that dedicates time and attention to understanding your situation and helping you prepare a plan that suits your lifestyle. Our skilled attorneys pay attention to every detail to allow them to provide practical solutions. Despite challenges, we work closely with our clients to protect their loved ones by reducing potential risks and hardships.

In addition to providing effective legal solutions, MPL Law offers competitive pricing to enable you to get the help you need. Instead of charging on a percentage basis, which can eat into your estate, our hourly billing rates let you get the true value for your money. Hourly billing affords you the flexibility to control costs and save money. Our attorneys only get paid for the services they actually render.

When the need arises, we provide aggressive advocacy and strategic legal representation. The aim is to deliver results while building long-lasting, trusting relationships. We have an excellent track record and reputation for supporting our clients through difficult times.

Contact MPL Law Firm for Your Probate Needs

Estate planning is essential to avoiding the time-wasting and expensive probate processes. You can arrange your assets in many ways, each of them having unique advantages. The strategy you adopt must suit your needs.

MPL Law Firm is a Pennsylvania-based law firm with over 30 years of experience helping people plan their estates. We partner with clients from different backgrounds, providing tailored legal services and excellent support. Contact us now and share your legal challenges with our dedicated attorneys!