Reasons to Avoid Probate
Reasons to Avoid Probate
Probate is sometimes seen as the big bad wolf of estate planning and something to be avoided at all costs. Probate does create delays and fees, leading many people scrambling for ways to avoid it.
What Is Probate Anyhow?
Probate is the court procedure that must be followed after someone dies to put their last will and testament into effect. An attorney files the will along with many other forms with the probate court, asking for the will be approved. Your executor is in charge of handling all the steps that are necessary to complete the probate process. An inventory of all of your property is created. Everything must have a value assigned to it, so things like real estate will need to be appraised. All of your debts, including taxes, are paid out of your estate. Once all of this is taken care of, your beneficiaries then receive what you have left to them. The entire process can take months to complete.
Probate Is Costly
One of the biggest reasons to avoid probate is because it can be expensive. Your estate will be paying an attorney to handle all the paperwork and any court appearances that become necessary. Your executor is entitled to collect a fee (although family members generally waive this), which would also come out of your estate. There are probate fees from the court involved in the process.
Probate is a Slow Moving Train
Another reason for avoiding probate is because of the length of time it takes for the process to wind up. Your assets can’t be distributed to your beneficiaries until the process is complete, which means your family (or whomever you have named as beneficiary in your last will) cannot access the money in your estate. Funeral costs, taxes and bills may have to be paid by them out of pocket until the estate can refund them. Bank accounts and investments in your name are frozen until probate concludes.
When your will goes through probate, it becomes public record. Many people wish to conduct their business without having all of this information available to anyone who might want to see it, so if this concerns you, avoiding probate is a good idea. Probate also essentially allows a judge to oversee your estate and make decisions about what you really meant by the words included in your will.
When your will is probated, your beneficiaries, as well as anyone who would inherit from you if you did not have a will, have the opportunity to contest the will. When you spell out exactly who is getting what in your will, it can lead to comparisons and family feuds. If you have family members who may be dissatisfied with what you have left them, a will contest proceeding can create even more delays and rack up attorney’s fees to get it all sorted out.
How to Get Around Probate
There are a variety of ways to avoid probate, but they all require you to do some advance planning. Jointly owned real estate can pass outside of probate if it is set up correctly. Bank accounts can also be set up to be paid on death to a person you choose. Life insurance payments do not go through probate. Trusts allow you to pass your assets to beneficiaries without any of the inconveniences of probate; there are no delays, no public record, and no fees involved with distributing assets from a trust.
Probate can definitely create many inconveniences for your family. Probate delays and costs can be frustrating for grieving family members. Probate avoidance allows you to plan for and work around all of these roadblocks.
If you have more questions about probate or need help handling a probate matter, you can talk to a lawyer through the LegalZoom personal legal plan.
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