What is probate and when does it become necessary?

Keith Pedrani explains that probate is the legal process of settling someone's estate after they pass away. Any assets owned individually at the time of death become part of that person's estate and must go through probate. In states like New Jersey and New York, the will is probated in the county where the individual passed away. For instance, in Bergen County, the Surrogate's Court in Hackensack would handle the process.

Probate is necessary whether someone leaves behind a will or dies intestate (without a will). In the latter case, the estate is still settled through probate, but distribution follows state laws under intestate succession.

How does a trust differ from probate?

According to Keith Pedrani, assets placed into a trust are no longer owned by an individual but by the trust itself, removing them from the probate estate. For example, if someone establishes a revocable trust and transfers their primary residence into it, the home is owned by the trust rather than the individual. This means the property passes according to the trust's instructions instead of through probate.

While a revocable trust's assets still count toward the taxable estate, an irrevocable trust can remove them from both the probate and taxable estates. Even with a trust in place, some assets may remain outside it and must go through probate after death.

Why do families often try to avoid probate?

Keith Pedrani points out that probate can be both expensive and time-consuming. Although some county courts, such as those in Bergen and Orange Counties, operate efficiently, the process still moves on the court's schedule and can take months or even years to complete. Hiring an attorney to manage probate paperwork and filings adds to the cost, as most attorneys bill hourly or charge a percentage of the estate's value.

In contrast, a trust offers a more streamlined, private, and immediate transfer of assets after death. However, Pedrani emphasizes that setting up a trust requires more work and upfront costs during the person's lifetime.

When is probate still necessary or even beneficial?

There are many instances when probate is unavoidable. Keith Pedrani explains that any assets not placed into a trust must still go through probate. Even if a family uses a pour-over will to move assets into the trust after death, they still need the court's approval to do so. Probate is essential for validating wills and managing estates where no living trust exists.

Although the process can be complex, Pedrani reassures families that with proper legal guidance, probate doesn't have to be overwhelming or excessively expensive.

How can a trust help families save time and money compared to probate?

Pedrani notes that a trust can significantly reduce the time, cost, and stress families face after a loved one's passing. For most people, their primary residence is their largest asset, making it a prime candidate for inclusion in a revocable trust. By placing the home—and other major assets like vacation properties—into the trust, heirs avoid the lengthy probate process needed to transfer or sell these assets.

He explains that a properly funded trust eliminates the need for ancillary probate in other states, saving heirs from having to open additional probate cases for out-of-state properties. While establishing and funding a trust requires effort upfront, families ultimately save time and legal costs later.

How do probate and trust processes differ between New Jersey and New York?

Keith Pedrani clarifies that probate and trust administration are largely similar across both states. In both New Jersey and New York, assets placed in a trust are removed from the probate estate. However, estate tax considerations differ.

In New Jersey, the state estate tax has been eliminated for Class A beneficiaries—typically direct family members—but still applies to certain non-Class A beneficiaries. In contrast, New York retains a state estate tax, requiring additional planning to minimize liabilities. Aside from tax differences, the probate process itself remains consistent between the two states.

How do the costs of establishing a trust compare to probate expenses?

Pedrani emphasizes that the cost of creating and funding a trust is generally much lower than the expenses associated with probate. Probate typically involves hourly attorney fees or a percentage of the estate, making it significantly more expensive than preparing and funding a trust during one's lifetime.

While some clients prefer to handle trust funding themselves to save costs, Pedrani recommends professional assistance for major assets to ensure proper execution. The investment in setting up a trust often results in substantial long-term savings for heirs.

How should families decide between probate and a trust?

Keith Pedrani concludes that probate and trusts are not mutually exclusive. Families can—and often should—use both. Establishing a trust allows major assets to bypass probate, while a pour-over will ensures any remaining assets not titled in the trust are eventually transferred into it through the probate process.

Pedrani advises families to view the trust as a tool to minimize, rather than completely eliminate, the need for probate. The best approach depends on each family's asset structure and goals, but with proper planning, they can reduce court involvement, protect their estate, and simplify the transfer of wealth to future generations.