Probate, in New York, can be a lengthy and frustrating process for grieving loved ones who need to move forward. Small estates can go through a simplified process that is faster, easier, and cheaper. Small estates are those valued at $30,000 or less, but that number can be deceptive because there are many types of assets that do not count toward the $30,000. Certain types of assets are automatically excluded from this amount, and a living trust can be created to keep other assets below the threshold. Of course, the executor will still need to file the right paperwork with the proper New York Surrogate Court. Our experienced probate attorneys can help you determine if you determine if the estate in question qualifies and make sure the entire process is handled correctly.
Jointly Owned Property
Surviving spouses are often relieved to discover that jointly owned property does not count toward the $30,000 threshold. Only solely owned property counts. Jointly owned homes and real estate and cars are not part of the $30,000. And that doesn’t just apply to property shared by married couples. For instance, a business co-owned by others, family or not, will not count.
Bank Accounts, Retirement Accounts, Life Insurance and Other Assets
Assets with named beneficiaries do not count. Jointly held accounts don’t count either. So, a joint bank account is automatically excluded and even an account that was individually held is excluded if there is a named beneficiary. Life insurance policies, bank accounts, retirement accounts and other types of accounts can have named beneficiaries, sometimes referred to as “pay on death”. But, be aware that in some cases no beneficiary has been named. If there is no named beneficiary, the estate is the beneficiary and that means it does count toward the value of the estate.
Stocks and bonds can be also registered with named beneficiaries, too, so that they automatically transfer to the beneficiary and do not count toward the $30,000 limit.
A living trust is an estate planning tool specifically used to avoid probate. While things like owning property jointly and naming beneficiaries for bank accounts and life insurance policies are often naturally occurring events, creating a living trust involving intentional planning. And, depending on the size and complexity of the estate, it can be complicated. Basically, a living trust can be drafted to scoop up anything that doesn’t fall into the categories above, to keep the value of the estate below $30,000.
One thing you need to understand is that the $30,000 threshold is gross value. That means, you can’t subtract the amount owned on a mortgage and things like liens. Obviously, this can have a significant impact on calculating the value of the estate.
The small estate process does not bypass the step of notifying heirs. All of the heirs must be notified, and they have to sign waivers agreeing to allow the estate to go through the simplified process. Heirs are referred to as distributes and must be named in your small estate affidavit petition.
A small estate can go through a simplified process, in New York, but there are still important steps to take, and the probate court decides whether the estate really qualifies. To learn more about small estates and probate, please call or contact us today to schedule your confidential consultation.