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For New York City residents, you may have heard some horror stories about the probate process.  The last thing someone wants to deal with after a loved one passes is a years-long legal battle to recover their loved one’s hard-earned assets.  Unfortunately, when a loved one dies in New York, if they haven’t taken steps to plan ahead of time, this process is largely out of the heir’s hands.  They often have no choice but to commence the probate process, hoping there are no complications that could drag the process out for years.

Luckily, there are preemptive measures that can be taken to ensure that your loved ones will not have to fight these legal battles after you are gone.  We will walk through the probate process in New York and outline how you can help your heirs sidestep this headache.

What Is Probate?

Probate is the legal process of proving a will’s validity.  When someone dies with a will, or without an estate plan altogether, their estate will have to pass through probate before their loved ones can inherit.  In New York, this process usually takes a minimum of seven months but can take years for more complex cases.  Complexities can stem from will contests or allegations of fraud or undue influence.  The court must validate the document before it allows the assets to be distributed.  As such, the court would first have to sort out any of these complexities to make sure the will is indeed valid.

Each will names an executor.  The executor is the person who spearheads the probate process, completing all of the necessary steps, and distributing the estate as the will directs them to.  The job of the executor can be stressful and time-consuming, which is another reason why creating an estate plan that can bypass probate is a savvy move.  

The executor will have to notify beneficiaries and creditors of the decedent’s death, file a probate petition with the court, pay off all of the estate’s debts (with money from the estate), and take inventory of all of the assets.  While the executor may receive some payment for their time and effort, the job of the executor can nevertheless be very burdensome.

How Long Does Probate Take in New York City?

The total timeline can vary significantly depending on factors like the size of the estate, will contests, efficiency of the courts, and the court’s ability to validate the will.  The rule of thumb in New York City is that this process will take at least seven months but can easily take upwards of a year or longer.  The seven months is a necessary minimum because creditors have seven months to make a claim to collect a debt from an estate.  If the estate is distributed prematurely, the creditors can seek to take back assets that have been distributed to the heirs to settle the debts.  

If a creditor seeks to make a claim after the seven-month period, the claim may be heard by the courts, though nothing may come from that claim.  If the claim succeeds, the creditor can seek to recover the estate’s assets, even if they have already been distributed.  An heir would only be responsible for the assets they have gotten from the estate – nothing further.  Due to the necessary seven months to allow creditors to collect, and the backlogged nature of New York City courts, it is likely this process will take a year or longer.

The courts are often backlogged and getting the will validated can take upwards of two months on its own.  Only after those two months can the executor begin to carry out their other duties, including taking inventory, paying debts, and waiting for creditors to make claims against the estate.  Some larger estates, or estates that have will contests, can take years.  During those years, legal fees, court fees, and taxes can eat through a big chunk of the estate.

There are many horror stories of corruption and unreasonable timelines for New York probate proceedings.  While each estate’s timeline and incurred costs will be different, your best bet for an efficient transfer of assets is to bypass probate as best as you can.  For this reason, we will address some ways that you can make this happen.

The longer the process takes, the more expensive the process gets, which ultimately leaves your heirs with less of your assets.  With proper estate planning this tedious and expensive process can be partially or completely avoided, providing your heirs with immediate access to their inheritance and ensuring a smooth transition of your assets when you pass away. In order to understand how this works, we’ll dig into what is involved in a probate proceeding and what can be done to avoid it.

What Are the Steps?

Before getting into the ways one can avoid probate it’s important to understand exactly what is involved in this process. There are several steps in the New York probate process.  This process includes:

1. Filing the probate petition;
2. Giving notice to all heirs and creditors of the decedent;
3. Validating the will; 
4. Taking inventory of the property;
5. Paying the decedent’s outstanding debts and taxes; and
6. Distributing the remaining assets to the named beneficiaries

These steps vary in length, but all of them are potential sources of stress and frustration.  The executor can receive additional money from the estate for the work they do during the probate process, but nevertheless, it could be an underwhelming sum considering the months of work they will have put in. 

What Assets Pass Through Probate?

Any assets named in a will will have to pass through probate.  These types of assets include any assets that you cannot name a beneficiary for, such as:

• Cars,
• Jewelry,
• Cash, and
• Home(s)

Assets that do not have to pass through probate are assets that you can name a beneficiary for.  These assets can include:

• Retirement accounts,
• Bank accounts with named beneficiaries,
• Jointly-held real property, and
• Property held in a living trust

An asset like a 401(k) is not a probate asset because you can name a beneficiary for the 401(k).  On that account, you can list your son Bobby or your cousin Maria as the beneficiary.  Since that asset in this scenario is distributed directly to your named beneficiary, it does not have to pass through probate.   

How Much Does Probate Cost in New York?

The cost of filing a probate petition in New York varies based on the size of the estate, but for many this process will cost at least a few hundred dollars.  The value of the estate is the gross value of the estate passing via the petitioned will.  For estates between $100,000-$249,999, the filing fee is $420.  For estates worth $250,000-$500,000, the cost is $625.  For an estate worth over $500,000, the fee climbs to $1,250.  While $500,000 may seem like a large estate, a house alone could cause an estate to eclipse that mark.  

As if a filing fee of $1,250 is not enough, the cost of retaining a probate attorney could cause these expenses to grow even higher.  The average hourly cost of a probate attorney in New York City is $350-$600, with some charging a flat rate around $3,000-$5,000.  

The amount of work a probate attorney would have to do on any particular case varies greatly.  For straightforward estates, the process, if you retain an attorney, could cost around $3,000, whereas for complex estates where people are contesting the will, the cost could exceed $10,000.  When all is said and done, a simple probate process in New York could cost around $3,000-$4,000 – before fees – Complex cases could push upwards of $10,000 or more.  If there is a contest to a will, the sky’s the limit when it comes to legal fees to defend the estate in litigation. These shocking numbers beg the question, how can you avoid probate in New York?

How Can I Avoid Probate?

There are three ways to avoid probate in New York, and only one of those ways is easy to control.  The first way that you can avoid probate is to have an estate of less than $50,000.  This is hard to control because if someone has an estate of over $50,000, it is unreasonable to expect them to get rid of assets just to avoid probate.

The second way to avoid probate is to have an estate with no probate assets.  Assets that have to pass through probate are assets that are solely distributed from the will.  For example, a retirement account with a named beneficiary does not have to go through probate while a sum of cash, or a home, would have to go through probate.  Another route for retirement accounts is to name a living trust as the beneficiary for these accounts.  This, too, could allow the asset to bypass probate while also allowing you to exert control over where these funds will go.

Assets that have named beneficiaries do not have to go through probate since they are not going to be explicitly named in a will.  Many assets, such as jewelry and cars, to which you cannot name a beneficiary will have to pass through probate via a will.  This is hard to control because the nature of some assets requires them to be distributed through a legal document.  A home is a great example of this type of asset.  More than half of the adults in New York own a home.  This means that, unless the home is put into a living trust ahead of time, more than half of the estates in New York will need to pass through probate.  

The last and most controllable option is to create a living trust.  Trusts do not have to go through probate like wills do.  Trusts name a trustee who will be tasked with doling out your assets upon death.  Here, the task of distributing assets and following your wishes falls to the trustee, not the executor and the courts.  

Living trusts can handle essentially all of your assets.  Retirement accounts can name the trust as the beneficiary, homes can have the trust’s name on the deed, and smaller items can be separately named and assigned, just to give some examples.  Since a trust can account for all of your assets, there could be no need for probate.  

While certain aspects of a pour-over will, such as a guardianship appointment, may still need to pass through the courts, it is likely that much less of your estate will have to pass through the courts.  This can expedite the process of your loved ones inheriting your estate while also making sure that they end up getting a larger amount of it.  The minimization of probate allows your heirs to save time and money, making the whole process more painless.  

An example that highlights the differences can be this.  A woman passes away with a home worth $500K; jewelry, furs, and a car totaling $100k; and retirement accounts worth $1 million.  The filing fee for this estate would be $1,250.  Hiring a probate attorney to assist you may cost around $5,000.  Then, as more time passes, more taxes and court fees will accrue and need to be paid from the estate.  The probate process could easily exceed $6,250 for this estate, and the process could take years to settle, meaning her heirs will not see an inheritance for quite some time.  If this woman had created a living trust instead of a will, there would be an immediate transfer of assets to her heirs.  This would greatly cut down on the time and monetary cost incurred by her heirs who are trying to inherit what is rightfully theirs.

Creating a living trust for your assets is the most controllable option because it is as simple as creating a trust in your estate plan.  While a trust can be a slightly larger investment than a will, the difference will be lower than what the probate process would cost.  As the probate process drags on, expenses such as property taxes, property maintenance, and court fees will quickly add up.  If you are interested in creating a trust to help your heirs bypass probate in New York, we recommend speaking with an experienced estate planning attorney at Rosenblum Law.

Which Path Is Right for You?

Deciding between a will versus a living trust comes down to personal preference.  Depending on your priorities and the assets you have, one option may be better than the other.  If, however, you believe bypassing probate is worthwhile, then a living trust is the way to go.

When making these decisions, the best thing you can do is consult with an estate planning attorney who has experience carefully tailoring estate plans to the needs of individual people.  At Rosenblum Law, our estate planning team can help you to explore your options and create the best estate plan for you.  For a free consultation, call us at 888-235-9021.