What is probate? A guide to settling an estate for your loved ones

Probate can get complicated. If you've never been an executor before, you may envision probate court as endless paperwork, a pile of legal bills and a lengthy battle with family. The good news is, planning ahead can make the process easier for your loved ones and help them avoid unnecessary complications.

Start by considering probate from your heirs’ perspective. Knowing where to find your will and other important financial information, such as creditors to contact, debts to pay and assets that should be distributed, will make things easier for them. And remember that not all your assets necessarily have to go through probate. Beneficiary designations and certain forms of joint ownership can allow some assets to pass directly to others.

Will your preplanning eliminate every probate issue that could possibly arise? It’s unlikely. But here’s how to help your loved ones avoid unnecessary friction.

Probate is the court-supervised process for validating your will and then legally transferring your assets to beneficiaries or heirs. If there is no valid will, state intestacy laws generally determine who inherits your probate assets. The probate process also addresses debts, taxes and claims.

If you die with a valid will, you’re considered “testate.” Your will would typically name an executor whom you want to handle your estate. The court may issue letters testamentary, which officially gives your executor legal authority to act on behalf of your estate.

Without a will, you’re considered “intestate,” so a court-appointed personal representative would handle the estate.

While probate refers specifically to assets that must go through the court process, estate administration is the broader process of settling your financial and legal affairs. In both cases, assets are collected, an estate inventory is made, debts and taxes are paid and property is distributed. Probate court records are generally public, though state laws vary on what can be accessed.

The exact process, deadlines and court requirements vary by state, but most probate court cases involve opening the estate, administering its financial affairs and eventually closing it.

For the probate process to start, someone files a petition with the appropriate probate court. The person who files the petition doesn’t necessarily have to be the executor named in the will or even a spouse or child. Depending on state law, the filer may be the named executor, someone who may inherit your assets under state intestate laws, a creditor of the estate, a business partner with a legally recognized interest in the estate or another interested person.

At that point, the probate court judge will review your will to determine its validity. If an executor is named in the will, that person may be formally recognized or appointed to administer the estate. If not, an administrator or personal representative may be appointed according to state law.

The executor or administrator then receives legal authority to act on behalf of the estate. This may involve obtaining letters testamentary (documents issued by a probate court that formally authorize the executor named in your will to act on your behalf) or another document establishing that authority. The representative also will be responsible for notifying your beneficiaries, heirs and creditors about the estate and the probate proceeding.

Once your estate is opened, the executor or personal representative identifies and gathers your probate assets. If you haven’t already made an estate inventory, this person is in charge of listing your property, financial accounts, real estate and other assets subject to the probate process.

The representative also determines what the estate owes and pays valid debts, expenses and applicable taxes using estate assets. This stage can be lengthy, especially if you own real estate or have business interests, complicated financial accounts or disputed claims.

After your estate’s debts, expenses and other obligations have been addressed, the executor or personal representative can generally distribute the remaining probate assets according to your will or state intestate succession laws.

Whether an asset becomes part of the probate estate generally depends on whether you own it outright (and solely versus jointly), if it has a named beneficiary or other transfer designation and your state’s laws. Common assets that may go through probate include real estate, bank accounts, investment accounts and business interests, such as rental property.

Assets you own solely in your name generally go through probate unless another mechanism allows them to transfer directly to someone else. Jointly owned property may or may not require probate. If the ownership arrangement includes a right of survivorship, your interest generally passes directly to your spouse or another surviving owner. However, jointly owned property without survivorship rights may become part of your estate and require probate.

This is another reason to name a beneficiary when the account allows it. Retirement accounts such as a 401(k) or IRA that don’t have a valid named beneficiary will usually become part of the probate estate.

Your accounts with named beneficiaries or transfer-on-death (TOD) designations, life insurance proceeds and assets held in a trust generally can transfer without probate. Retirement accounts and life insurance policies commonly allow you to name beneficiaries, while TOD designations can work similarly for certain financial accounts or securities. Assets held in a trust generally follow your preferred terms.

But problems can arise if any of these designations are outdated. For example, let’s say you bought life insurance when you were single and your only beneficiary was your sibling. Years later, you got married and became a parent. If you never updated your beneficiary designation, this oversight could result in your sibling receiving the life insurance proceeds rather than your spouse or another person you now intend to support.

Consider setting an annual reminder to review the beneficiaries listed on your accounts and confirm they still reflect your wishes. Keeping your beneficiary designations current can help make sure your assets pass to the people or organizations you want.

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A straightforward, uncontested estate can be smooth sailing for one family and only last a few months.

For other families, one person challenging the will or the estate can make the probate process last for years. Without a well-prepared will and estate plan, loved ones may need to navigate disputes themselves or spend estate money on attorneys to help settle them.

There are also costs and time involved in determining court procedures, filing fees, creditor deadlines and whether attorneys or personal representatives can charge fees based on the estate's value. Real estate, business interests, multiple beneficiaries, assets in different states and difficult-to-value property may require additional time and professional services.

The ranges below include general planning estimates without guaranteed deadlines. Probate costs vary substantially by attorney-fee rules, court, estate size, executor compensation rules, state and whether the estate is contested.

Remember that you can take steps now to make the probate experience easier for your loved ones. They may be navigating probate while grieving, but you can create a thoughtful plan now to help simplify the process.

First, updating beneficiary designations is an easy way to make sure that your accounts can be passed directly to the people or organizations you designate. Joint ownership with rights of survivorship is another option to consider where appropriate. Ownership usually can pass to the surviving owner, such as your spouse, when you die.

Additionally, trusts can help you determine not only who receives assets but also when and how those assets are distributed. For loved ones who may need ongoing support, you also can place conditions around how those assets are managed.

Finally, don't underestimate small estate procedures, which can help simplify or avoid probate.

Your estate plan is more than a pile of legal documents. It is a way to put your values into action and help keep the peace within your family. If you're ready to flesh out your overall estate plan, consider talking with a Thrivent financial advisor and an estate planning attorney to find out where to start, how to organize your estate inventory, what kind of accounts you should set up and who needs to be notified of your decisions.