Many people believe avoiding probate will save them money. However, that is only sometimes the case.
Typically, a will must go through the probate process to finalize and distribute assets.
The probate procedure can, fortunately, be avoided. For example, you can establish a Trust to manage your assets.
The longer a probate process takes, the more frustrating it can be for family members. Mainly if the heirs depend on receiving an inheritance for their financial or quality of life, it can be stressful to wait months and even years while creditors and other parties are involved.
During probate, loved ones cannot access bank accounts or other investments and have to deal with real estate issues that may not go smoothly. In addition, if the executor is not exceptionally organized or good with finances, settling the estate can take even more time.
Fortunately, many estate planning options can minimize or even skip the probate process altogether. This includes ensuring that beneficiaries are up to date on life insurance and retirement accounts (which automatically pass to the surviving owner), putting some of your assets into legal trusts, and making sure any property you own jointly with others does not have to go through probate by being correctly titled. Taking these measures can save your loved ones valuable time and money.
Depending on the size and complexity of the estate, probate can cost thousands of dollars in legal fees, executor fees, and other expenses. Avoiding probate can save heirs money by reducing these costs.
The probate process might become more expensive the longer it goes on. This is because the executor has to keep track of all assets, pay debts, file policy claims, and ensure that accounts get closed.
Simple methods for avoiding probate include creating a payable on death (POD) account for your bank accounts, putting your house in joint tenancy with rights of survivorship, and using a trust for investments.
Many states have laws that allow a deceased person’s estate to skip probate entirely if it meets certain conditions. These include a minimum value threshold and an assumption that the estate has a valid will. Generally, these aren’t available to everyone. However, a carefully drafted will make it possible to avoid probate for most estates. In addition to preventing court costs, this method can help to keep sensitive personal financial information private.
Probate is a court-supervised proceeding that authenticates your Will (if you have one). It authorizes the Executor to pay all debts and taxes and distribute assets to beneficiaries per the instructions in your Will. It’s a time-consuming and expensive process.
The heirs must also determine how to use the assets and where to keep them. Some heirs may have disputes or disagreements, leading to probate litigation. This can linger for months, and even years, and eat up the estate’s value.
Avoiding probate altogether is possible, but you must have a thorough estate plan and know how to transfer assets. This includes joint ownership, trusts, and beneficiary designations. Avoiding probate can also make it easier for your family to access the purchases they need after you’re gone. This will ease their stress at a tough times. It can also prevent them from spending their inheritance on legal fees or taxes. If you are considering skipping the probate process, work with a probate attorney to ensure your plan is sound.
Probate is a court-supervised process that authenticates your Will (if you have one) and authorizes your Executor to settle your estate and distribute property. Your assets are accounted for and appraised for their total value during this time. Debts are paid, and any remaining weight is allocated to your heirs.
If you don’t have a Will or trust, state intestacy laws dictate how your estate is settled and distributed. Many states have a threshold below which probate can be skipped. In some cases, the fees associated with probate can be more than the actual value of the estate itself.
Some assets can bypass the probate process, including life insurance proceeds, 401ks, medical savings accounts, and individual retirement accounts designated beneficiaries. Non-titled property – furniture, appliances, and clothing that doesn’t have paperwork saying it’s formally owned – can also avoid probate if your loved ones deal with it in their Will. Another way to skip probate is through legal trusts, which transfer ownership of an asset from the estate owner to a trustee.
A significant drawback of probate is that it’s public. This means anyone can access the information in probate court documents and see what was paid off, what assets were distributed, etc. This can be a big problem for some families, especially if heirs are financially unstable or want to stay out of the spotlight. Creditors can also monitor court filings and wait to sweep in and collect against an inheritance.
To avoid these problems, we often recommend that clients take steps to prevent assets from going through probate. This involves placing most of their assets in a trust and automatically orchestrating their estate plan to pass to designated inheritors upon death. We’ve seen many cases where an heir has spent tens of thousands of dollars fighting over worthless personal property in the final accounting stages of probate, delaying the case for years. This can be easily avoided with proper planning.