When you pass away, your family may need to visit a probate court to claim their inheritance. This can happen if you own property (like a house, car, bank account, investment account, or other asset) in only your name. Although having a will is a good basic form of planning, a will does not avoid probate. Instead, a will simply lets you tell the probate court of your wishes. Your family still has to go through the probate process to make those wishes legal.
Now that you know why probate might be necessary, here are 3 key reasons you want to avoid probate.
It’s 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 mean account numbers and social security numbers, since the courts have at least tried to reduce the risk of identity theft. However, what it does mean is that 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 available. Often the information is only a click away because many courts have moved to online systems. Most people prefer to keep this information private, and the best way to make sure discreteness is to avoid 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 small or “simple” estates can be expensive. These costs can easily skyrocket into the tens of thousands or more if family disputes or creditor claims arise during the process. This money from your estate should be going to your beneficiaries, but if it goes through probate, a significant part could go to the courts, creditors, and legal fees, instead.
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, especially when you consider your family may be making decisions while grieving. With proper planning, you can reduce the risk of costly conflict and cut or eliminate some costs, like court costs and executor fees; if there’s no probate case there will be no probate costs.
It can take a while.
While the time frame for probating an estate, can vary widely from state to state and by the size of the estate itself, probate is not generally a quick process. It’s not unusual for estates, even simple or small ones, to be held up in probate for 6 months to a year. During probate your beneficiaries may not have easy access to funds or assets. This delay can be especially difficult on family members going through a hardship who might benefit from a faster, simpler process, such as the living trust administration process. Bypassing probate can significantly speed the disbursement of assets, so beneficiaries can benefit sooner from their inheritance.
If your assets are 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. Fortunately, with proper trust-centered estate planning, you can avoid probate for your estate. Estate planning can also 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.
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