How Much Does an Estate Have to Be Worth to Go to Probate? Understanding Thresholds, Rules, and Exceptions

“Everybody hates probate,” says Ellen Cookman, JD, founder of the estate-planning firm Cookman Law—even most lawyers who collect fees from it.

It’s easy to understand why. Probate is slow, expensive, and public, and it can leave heirs waiting months or years to access what’s been left to them. The good news is that not every estate goes through it.

We asked Cookman to help us better understand what probate is, how it works, and what we can do to plan ahead and simplify—or avoid—the process for our loved ones.

What Is Probate?

“Probate is basically the state-described way that assets pass to the next generation if you don’t have your own plan in place,” Cookman says.

Any time assets don’t have clearly specified recipients lined up, a probate court will assess the situation and distribute those assets to the deceased person’s heirs using the model outlined by state law.

When Does an Estate Go to Probate?

By default, every estate of a certain size goes through probate unless all of its assets have been placed into a revocable trust or have designated beneficiaries.

That is, simply having a will does not exempt your estate from probate. And if someone dies without a will, a status known as dying “intestate,” their estate will certainly go to probate.

There are a few reasons why people dread the probate process.

• Time: The process can take months and even years to play out, during which time the assets are inaccessible.
• Loss of control: The way state law dictates that assets are to be distributed may not be to the liking of the family and may not even reflect the wishes of the deceased.
• Cost: A big chunk of the estate’s value is extracted through attorney and court fees, shrinking the inheritance of the heirs.
• Public: Most probate court filings are publicly available and can lead to attempted fraud on the estate.

The exception: An estate may not be required to go through probate—or may only be subject to an abbreviated version of probate—if it meets certain criteria concerning its total value. These thresholds vary from state to state.

Probate Thresholds by State

Every state provides some type of streamlined procedure for small estates, but thresholds vary widely—from $20,000 in North Carolina to $400,000 in Wyoming. SmallEstateMap.US is a useful resource that offers a state-by-state breakdown of current thresholds and simplified procedures.

Note that many states offer either a small estate affidavit (which lets heirs collect assets without opening a probate case) or a simplified probate process (a streamlined court procedure)—more on this below.

Eligibility depends on state law and may also be affected by the type of property, whether there’s a will, and other factors. These thresholds provide a general reference only.

Based on “at a glance” information from SmallEstateMap. For reference only.

What assets are counted toward the probate threshold?

In most states, only the value of probate assets counts toward determining whether an estate qualifies as “small.” That is, assets held in an account that names a beneficiary on a designation form, or assets co-owned with another person, are generally not included.

For purposes of probate thresholds, then, assets that count toward the threshold include:

• Home or land titled solely in the name of the deceased
• Individual bank accounts without a payable-on-death beneficiary
• Investments held solely in the deceased person’s name with no transfer-on-death registration
• Assets not held in a revocable trust

Assets that generally do not count:

• Retirement accounts with designated beneficiaries
• Life insurance payouts with named beneficiaries
• Payable-on-death bank accounts
• Transfer-on-death brokerage accounts
• Property held in a revocable trust
• Jointly owned property with right of survivorship
• Assets owned by a surviving spouse with joint tenancy in jurisdictions where that is recognized

Exceptions: Small Estate Affidavits and Simplified Probate

Small estate affidavits and simplified probate are two different kinds of shortcuts for settling a small estate. “If you have just a little bit of money, the court doesn’t want to deal with it, so they give you a pass,” Cookman says.

Small estate affidavit: Instead of opening a probate case, the heirs sign a sworn statement that the estate meets the state’s legal threshold as a small estate. They may then present this affidavit to institutions holding the assets of the deceased and claim those assets.

Simplified probate: The estate is settled via a streamlined version of a probate case, with fewer filings, hearings, and probate process steps than usual. It typically results in quicker distribution of assets than full probate. Not all states provide for simplified probate.

Assets That Avoid Probate

The list of assets that are not subject to probate largely overlaps with those not counted toward the small-estate threshold. These include:

• Property held in revocable trusts
• Assets owned by a surviving spouse with joint tenancy
• Life insurance payouts with designated beneficiaries
• Jointly owned property with right of survivorship
• Payable-on-death bank accounts
• Retirement accounts with named beneficiaries
• Transfer-on-death brokerage accounts

Special Considerations for Real Estate

Probate requirements for real estate vary widely. Some states have separate thresholds for personal property and real estate, and others will not allow a small estate affidavit if the estate includes any real property.

For example, Cookman says, “California has a different probate threshold for real property. It’s $750,000, not $208,850.”

How to Plan Your Estate to Avoid Probate

The best way to avoid probate is to consult an estate-planning specialist who can help you prevent leaving any assets unaccounted for. The two key tools for securing your assets are the revocable living trust and the pour-over will.

“A trust is like a basket into which you can place your assets by titling them in its name, with you as the trustee,” Cookman says. Everything you own should end up in the trust, with the exception of accounts for which you already have clearly named beneficiaries who are set up to inherit your assets if you die.

Sometimes people go to the trouble of creating a trust but then fail to put anything in it. “Often, the attorney who creates the trust will also create a deed putting the real property into it, but then leave it up to the client to move their other assets into the basket,” Cookman says. Procrastinating or forgetting to do so can create probate headaches for your heirs.

Fortunately, as Cookman explains, “If you do forget to put something in the trust, you can use a pour-over will to get that asset into the trust.” A revocable living trust works only if you transfer assets into it during your lifetime.

By creating a pour-over will alongside the trust, you build a sort of safety net for your estate plan. The pour-over will essentially says, “At my death, any assets that I own individually should be transferred into my revocable living trust.” But you typically still need to go through a court process to get those assets transferred into the revocacble trust.

Always complete your beneficiary designation forms when you create retirement accounts. “And,” Cookman reminds, “update them whenever something changes.” It’s not uncommon to see people die having never changed their beneficiaries from their parents to their spouse after they got married, or for an ex-spouse to still be on file.

Remember, the fewer assets left “hanging out” or stuck in your name with no beneficiary, the smaller your estate will look to the probate court. That’s just one more reason to make sure that everything you own has a designated beneficiary.