I wrote about probate in a prior blog (see “What is Probate?”). In short, probate is the legal process of administering a decedent’s probate estate under the supervision of a probate court. There are many drawbacks to probate, however, and, as a result, avoiding probate oftentimes becomes a key goal in putting together an estate plan. Avoiding probate means titling assets in a manner that prevents them from being included in the probate estate. The balance of this blog explains several reasons why you should avoid probate.
Probate Estates Are Public
Activities and assets of a probate estate are part of the public record. This means that anyone can go to the probate court and review the assets of a decedent’s probate estate, the claims of their creditors and who receives the net proceeds a decedent’s estate. Testators who do not want their nosy neighbor or a potential financial predator who could prey on a beneficiary’s inheritance to obtain this sensitive information would be advised to keep that information out of the public record by avoiding probate.
Probate Takes a Lot of Time
Probate can be a lengthy process and typically lasts at least six months. However, some probate estates can go on for years before they are settled. If an estate contains sophisticated assets or is involved in ongoing litigation, it is not unprecedented for an estate to be open for several years.
Probate Can Be Costly
Probate can be costly and result in court costs, statutory executor (or administrator) fees and legal fees. For a $500,000 estate, these expenses can easily exceed $25,000. Much of that expense, however, could have been prevented by avoiding probate in the first place.
Avoiding Probate
Probate and the negatives associated with probate can be avoided with proper planning. This would include making sure that any assets that would otherwise be part of the probate estate (1) are owned jointly with another individual, (2) have effective beneficiary designations (either to specific beneficiaries or a trust), or (3) are owned by a trust. Even if steps are taken to avoid probate, executing a will is still advisable in case a beneficiary dies or additional assets are acquired in the future that would be included in a probate estate.
I CAN HELP
If you have any questions about probate or need assistance administering a probate estate, please do not hesitate to contact me.
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