When you pass away, your family may need to visit a probate court in order to claim their inheritance. This can happen if you own property (like a house, car, bank account, investment account, or other asset) solely in your individual name. Although having a will is a good basic form of planning, a will does not avoid probate. Instead, a will simply lets you inform the probate court of your wishes; your family still has to go through the probate process to make those wishes legal.
Now that you have an idea of why probate might be necessary, here are 3 key reasons why you want to avoid probate, if at all possible.
- The probate proceedings are all public record.
Almost everything that goes through the courts, including probate, becomes a matter of public record. This means when your estate goes through probate, all associated family and financial information becomes accessible to anyone who wants to see it. This doesn’t necessarily include account numbers and social security numbers; the courts have at least taken some steps to reduce the risk of identity theft. However, the value of your assets, creditor claims, the identities of your beneficiaries, and even any family disagreements that affect the distribution of your estate will be public and, often times, only a click away via an online docket system. Most people prefer to keep this type of information private. Therefore, the best way to ensure estate discreteness is to keep your surviving heirs out of probate.
- 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 quickly skyrocket into the tens of thousands if family disputes or creditor claims arise during the process. Needless to say, a significant portion of a probated estate can be diverted from your loved ones to the court, creditors, and legal fees. Generally speaking, most estates lose somewhere between 1-5% of the total value when a probate, and associated costs, are required.
Of course, setting up an estate plan that avoids probate does have its own costs. Benjamin Franklin wrote, “an ounce of prevention is worth a pound of cure.” Like the “ounce of prevention,” costs you incur now to put a plan in place are more easily controlled than uncertain costs in the future, especially when you consider your family may be making decisions while grieving. With proper planning, you can minimize the risk of costly conflict and also reduce or eliminate some costs, like court costs and personal representative fees.
- It can take many months.
While the time frame for probating an estate can vary widely from state-to-state, probate is generally not a quick process. It’s not unusual for estates, even seemingly simple or small ones, to be held up in probate for 6 months to a year. During this period, your beneficiaries will likely have no access to funds or assets (even the “family home”). This delay can be especially difficult on family members going through a hardship who might benefit from a faster, simpler process. Bypassing probate can significantly expedite the disbursement of assets so beneficiaries can benefit sooner from their inheritance. Finally, if your assets are located in multiple states, the probate process must be repeated in each state in which you hold property. This repetition can cost your family even more time and money.
The good news is that, with proper trust-centered estate planning, you can avoid probate for your estate, simplify the transfer of your financial legacy, and provide lifelong asset and tax protection to your family. To learn more, call us for an appointment. One of our experienced attorneys will be happy to strategize with you.
