When is Probate Required in Idaho?
By state law in Idaho, probate is legally required any time a person passes away while owning either (1) any interest in real estate or (2) belongings (but no real estate) with a total value of $100,000. The only situation where probate is not required is when a person dies without any real estate and total assets of less than $100,000. But even in those circumstances, there may be an advantage in going to probate to try and eliminate creditor claims to maximize the inheritance received by the family.
There are no exceptions to these rules. Even if a 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 owned by the deceased spouse.
Failure to do so will definitely cause things to grind to a halt in the future when the surviving spouse or heirs wants to sell or refinance the family home or other real estate in which the deceased person had an interest. Before that, there may be a problem with bank, stock brokerage, or other similar accounts on which the deceased person’s name appears. There is a risk of those accounts being frozen when the institution realizes that the owner (or one of the owners) has passed away. Consequently, where probate is legally required, it is best to have that taken care of as soon after the death as possible.
If you have recently lost a loved one and have probate questions, please call 939-2600 to discuss your circumstances with Barry Peters or to set up a FREE Initial Consultation to have all your questions answered.
What is Probate?
Probate typically consists of four primary steps.
First, if there is a Will, the person named as Executor in the Will submits an application to the probate court for a determination that the Will is the last Will which was made by the deceased. If there is no Will, then usually a 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 the decedent owned at the time he or she passed away. An Inventory and Appraisement is prepared and filed with the probate court.
Third, after a Notice to Creditors is published in a local newspaper, any debts that were owed by the deceased are paid by the Executor from the property owned by the decedent. Please Note: Neither the Executor, nor the heirs, will ever be required to pay the decedent’s debts from their personal assets.
Finally, the remaining assets are distributed to the heirs in accordance with the Will of the decedent (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.
Unfortunately, there is nothing that can be done after a death has occurred to avoid probate, though 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 loved ones are not required to go though the delay and expense of a probate proceeding.
The most common – and for most people, the best – method of avoiding probate is to set up a Living Trust or a Family Trust. Doing so will totally eliminate the time delay and the expense of having to probate the estate at death. Instead, after the person who set up the trust has passed away, within a few days the person named in the Trust Agreement as the successor trustee will step up and take control of all assets in order to carry out the wishes of the decedent in terms of distributing the remaining possessions in the trust to the persons or charities selected by the decedent. There are no legal proceedings or court fees, few if any attorney fees, and the whole process is entirely private.
It is worth noting that the fact that a person was married at the time he or she passed away does not mean that probate is not required. A surviving spouse does not automatically inherit the property of the deceased spouse. Because Idaho law permits a married person to leave his or her property to a child, a friend, or a charity, the law requires that a probate occur to determine who is really entitled to inherit the decedent’s property even when there is a surviving spouse.
On the other hand, a married couple who sets up a Living 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.
Besides setting up a Living 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, each of these alternatives usually have significant adverse tax or other implications. A person should confer with an attorney before deciding to use one of these options in order to avoid probate.
How Lengthy and Expensive is Probate?
How time consuming is the probate process? Although the Executor has the option to distribute some of the decedent’s property earlier, by law the probate cannot be completed and closed up until at least six months after the decedent passed away. And although there are certainly cases of probate dragging on for years, 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.
Additional Advantages of a Living Trust:
For most people, the best way to avoid the time and expense of probate is to create a Living Trust. As added bonuses, a Living Trust will also:
- Reduce or eliminate any state or federal estate taxes that your family and heirs may be required to pay on the inheritance that you leave them.
- Guard the privacy of your financial affairs.
- Permit you to decide who will manage your affairs in the event that you become physically or mentally disabled.
One final comment: If you own real estate in more than one state, the importance of avoiding probate increases. If you don’t take the time to set up a Living Trust and move your real estate into the Trust, when you pass away your heirs will be required to go through a probate here in Idaho. Then they will have to do an ancillary probate proceeding in every other state where you owned real estate. The total costs they are required to pay can increase dramatically.
For a more in-depth look at the details that may be included in your Will or Trust, click HERE or on the “Q & A” Tab at the top of this page.
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Barry, you were the perfect fit for our circumstances. Will highly recommend you to everyone we know." (Linda W., Nampa, Idaho)