Avoiding Probate. Probate, the court-supervised process of distributing your estate, can be time-consuming and expensive. You can minimize the assets that need to pass through probate or eliminate probate altogether by using certain devices such as:
- Revocable living trusts.
- Joint tenancies with rights of survivorship.
- Transfer on death deeds or pay on death accounts.
- Beneficiary designations for life insurance and retirement plans.
Here are three reasons why you might prefer for your estate to pass outside probate:
1. Probate expenses can shrink your estate significantly. Cost is probably the most important reason people decide to avoid probate. Attorneys' fees are often the biggest expense. Most personal representatives decide to hire an attorney to navigate the probate process. It can be difficult for a non-attorney to figure out the procedures, forms, and deadlines. Courts do not always have clear instructions available for non-lawyers or staff available to help. Some states require the personal representative to hire an attorney. Attorneys' fees can be expensive. In some states, they are based on the value of the estate. In others, on the amount of time the attorney spends and what the judge thinks is reasonable. It is not unusual for them to run into the tens of thousands of dollars depending on the complexity and size of the estate and whether the estate is contested. Additionally, there can be fees for executors, court filings, appraisers, and other expenses, such as real estate taxes, insurance, utilities, and property maintenance. These fees are all deducted from the estate and can take a big bite out of it. For smaller probated estates, fees can greatly diminish the distributions the heirs receive.
2. Probate can take a long time. Probate is not typically a fast process. A minimum of six months is usually required. Even routine uncontested probates can take several years to complete. While the probate drags on, the beneficiaries and heirs wait to get their distributions. By contrast, when probate avoidance methods are used, property transfers can be completed in weeks.
3. Probate filings are public. Many court probate filings are a matter of public record. Probate could open up information to the public that you would prefer to keep confidential. If you call my office for an appointment, I will be happy to answer any questions you may have about avoiding probate or other aspects of planning your estate. After a complete review of your assets, family situation, and goals, I will design a customized plan for you.