There are several reasons why you should avoid probate; however, in this post we will address the top 3 reasons.
When a person passes away, their family may need to go to a probate court in order to claim their inheritance. This can happen if the person owns property or assets (like a house, car, bank account, investment account, etc.) solely in their name.
Many people mistakenly think that having a will avoids probate. Unfortunately, a will does not avoid probate, rather, it lets the family of the decedent inform the probate court of the decedent’s wishes. The decedent’s family still has to go through the probate process so the court can make those wishes legal.
Here are 3 key reasons why you want to avoid probate if at all possible.
1. It’s all public record.
Nearly everything that goes through the courts, including probate, becomes a matter of public record. This means when a decedent’s estate goes through probate, associated family and financial information becomes accessible to anyone who wants to see it. The courts have taken some steps to reduce the risk of identity theft so information such as account numbers and social security numbers are not necessarily made public; however, the value of the decedent’s assets, creditor claims, the identities of beneficiaries, and even family disagreements that affect the distribution of the decedent’s estate will be made public. This information is often only a click away because many courts have moved to online systems. Most people consider this type of information to be private and prefer to keep it out of the public records. The best way to ensure discreteness is to keep the estate out of probate.
2. It can be expensive.
Thanks to court costs, attorney fees, executor fees, and other related expenses, the price tag for probate can easily reach into the thousands of dollars, even for small or “simple” estates. These costs can easily skyrocket into the tens of thousands of dollars or more if family disputes or creditor claims arise during the process. The money from a decedent’s estate should be going to the decedent’s beneficiaries; however, when the estate goes through probate, a significant portion could end up going to the courts, creditors, and legal fees, instead.
Setting up an estate plan that avoids probate is not without its own costs, but the costs incurred to put a proper estate plan in place are easily controlled and can minimize the risk of costly conflict, reduce or eliminate court costs and executor fees, and eliminate probate costs. Benjamin Franklin wrote, “an ounce of prevention is worth a pound of cure.” In this case, an “ounce of prevention,” can significantly increase the amount of the decedents estate that ultimately gets distributed to the beneficiaries.
3. It can take awhile.
The time frame for probating an estate can vary widely from state to state. Regardless of the size of the estate, probate in general, is not a quick process. It is common for seemingly simple or small estates, to be held up in probate for 6 months to a year or more, during which time the beneficiaries may not have easy access to funds or assets. In most cases, family members would benefit from a faster, simpler process, such as the living trust administration process. Bypassing probate can significantly speed the disbursement of or access to assets, so beneficiaries can benefit sooner if desired by the decedent. Furthermore, when assets are located in multiple states, the probate process must be repeated in each state in which the decedent held property. This repetition can cost the family even more time and money.
Good News – You can Avoid Probate
The good news is that with proper trust-centered estate planning, a person can avoid probate for his/her estate, simplify the transfer of his/her financial legacy, provide lifelong asset protection and mitigate taxes to his/her family.
To learn more, contact us to schedule an appointment to discuss your unique situation.