What is Probate?
Probate is the legal process required in most countries to officially recognize the heirs of an estate. This process must be undertaken before an executor distributes the assets of the deceased. It is necessary whether the individual had a valid will, with the documentation terminology varying between "Grant of Probate" and "Grant of Administration" depending on the circumstances.
The process begins in the country where the deceased was domiciled, and upon completion, must be recognized by the probate courts in each jurisdiction where the assets are located.While some countries allow discretion in applying a formal process, doing so generally carries the risk of legal challenges, and most financial institutions require formal probate documentation to release funds The duration of probate can range from weeks to several years, especially in cases where the estate is complex, unstructured, or disputed.
When Does Probate Apply?
Probate is typically required following most deaths, regardless of whether a will exists. Exceptions do exist, such as in Saudi Arabia, where assets are divided according to Shariah principles without the need for a Grant of Probate. These divisions are then presented to international courts where assets are held.
All assets within a deceased person’s estate, including shares in companies, are subject to probate, unless they are held in a structure like a trust or foundation, where assets are not registered in the individual's name and so upon the principal’s death, usually no further legal process is required
Implications of Probate
The probate process can be lengthy and stressful, especially for international estates. It can result in significant legal and court fees, which may erode the value of the estate. Additionally, the process can lock up assets, preventing their distribution until probate is granted and due diligence is updated, potentially causing issues for the trading of liquid assets as accounts may be frozen during this period.
Smoothing the Wealth Transfer Process
Effective planning is essential for easing the wealth transfer process. While a will may expedite probate, it does not prevent the associated costs and delays. Trusts or foundations are common succession solutions that enable seamless wealth transfer upon an individual’s death. Another option includes lifetime shares in a company that transfer upon death, where successors are shareholders from the outset and their rights adjust at the time of the event.
We encourage a proactive approach in managing the wealth transfer process to ensure that heirs are well-informed and can avoid disputes and unexpected stress. Families may find that a will or intestate solution suits their needs, but more structured approaches might be necessary depending on their specific circumstances.
Conclusion
For those seeking to understand more about the probate process or to explore estate planning options that best fit their family’s needs, please contact your relationship manager at The Family Office. We are here to support you in navigating these complex but crucial considerations to secure and streamline the future of your family’s wealth.