Financial Word of the Day: Probate

Larry Jones
Jun 24
2 min read

Updated: Jun 28

Definition:

Probate is the legal process by which a deceased person’s will is validated, and their assets are distributed to heirs and beneficiaries. If there’s no will, the court appoints an administrator and distributes the assets according to state law.

Why Should You Care About Probate?

Let’s get right to it: probate can be slow, expensive, and public. That’s the trifecta of financial inefficiency most people want to avoid—especially when you’re grieving the loss of a loved one.

When someone dies, their estate (all the stuff they owned—house, bank accounts, car, collectibles, etc.) doesn't magically transfer to their family. It often has to go through this court-supervised process called probate. This involves:

Proving that a will is valid (if one exists),
Identifying and appraising the deceased's property,
Paying off debts and taxes,
And distributing what’s left to the rightful heirs.

Sounds simple? Not quite. Probate can drag on for months, even years, depending on the complexity of the estate, whether anyone contests the will, or how backlogged the local court system is.

Real-Life Example:

Let’s say Uncle Joe dies and leaves behind a house, a savings account, and a car. If he had a will, it goes through probate to verify and carry out his wishes. If he didn’t, the court decides who gets what—maybe not the way Uncle Joe would have wanted.

Now here’s the kicker: probate fees (court costs, attorney fees, etc.) can eat up 3% to 7% of the estate. On a $500,000 estate, that’s up to $35,000 gone—just to sort things out!

How to Use This Term in a Conversation:

"We want to make sure our kids don’t have to deal with probate when we’re gone, so we’re setting up a living trust.”

Or…

"Probate took over a year when my dad passed away. Now I see the importance of good estate planning."

Smart Money Tip: Avoid Probate When You Can

Here are some simple ways to keep assets out of probate:

Name beneficiaries on retirement accounts and life insurance policies.
Add “Payable on Death” (POD) or “Transfer on Death” (TOD) designations to bank and investment accounts.
Own property jointly with right of survivorship.
Set up a living trust to hold major assets like real estate or business interests.

Doing these things doesn’t just save time and money. It brings peace of mind—for you and your loved ones.

Bottom Line:

Probate is the court’s way of wrapping up someone’s financial life. But smart planning now can make that process faster, cheaper, and less stressful later. Don’t wait until it’s too late—take control while you can.

Speak the Language of Money Tip:If you're building wealth, you should also be thinking about how to protect it—and that means understanding probate and how to sidestep it. This is one of those “adulting” moves that your future self—and your family—will thank you for.