The Pros and Cons of Probate — Is it the best option for me?

Thu, Aug 28, 2014

Probate

Will-being-signedThere are many opinions about the pro’s and con’s of probate, addressing the questions of whether or not it is a good idea to rely on probate for your estate after you die.  Probate is the legal process by which the assets of someone who has died are distributed to his or her creditors and heirs/beneficiaries.  When a person dies, he or she usually leaves behind assets, such as money, real property and stocks.  Often, they leave behind debts as well.  In a nutshell, probate is the court-supervised process of ensuring that debts are paid and assets distributed to creditors and heirs/beneficiaries.  To accomplish this, a court will appoint a representative (sometimes multiple representatives) to serve as a fiduciary (called a personal representative or executor) to take control of most, if not all, of the decedent’s assets, and distribute them according to law.

If the deceased left a will, then the personal representative and the court will honor the requests stated, to the fullest extent possible but within legal boundaries.  However, if there is no will (called intestate), the assets are distributed according to law in a predefined order (spouse, children, parents, siblings, etc.).  If you want to make sure that your grandchildren get a bigger inheritance than your children, then it is important to leave a will or establish non-probate alternatives (such as a trust or joint account).

What are some reasons why someone should avoid probate?  One reason to avoid probate is that it can be time consuming and expensive.  Since probate is a process controlled by the courts, it can take many months if not years to complete.  While it can theoretically be completed in six months or less, realistically in most instances probate takes from one to three years.  It can take even longer if the estate is a complicated one or if any of the heirs are contesting the will.  For loved ones waiting for a distribution, this can be a very long time to wait.

While the costs of probate vary by State, probate can be very expensive.  Attorneys fees and personal representative fees typically range in the 4 to 6% range, and court costs and filing fees can be over $1,000 in some instances.  Accountants and appraiser fees can chew further into the estate, lessening the amount available for distribution to beneficiaries.

Probate is also a public process.  Since probate is handled by the court system, most of the documents filed (including the will) become part of the public record.  One exception is the inventory.  Not only are the debts of the decedent made public, so too are the distributions made through the probate.  This means that anyone who cares to look up the public record can discover that you now have your great aunt’s gold coins.  This sort of publicity can be risky.

What can you do about this?  The most straightforward way to avoid probate is simply to create a trust.  A living trust helps ensure your assets pass to your heirs privately and as inexpensively as possible.  What most people don’t realize is that a living trust is merely an alternative to a will.  Unlike a will, which merely distributes your assets upon death, a living trust places your assets and property “in trust,” which are then managed by a trustee for the benefit of the trust’s beneficiaries.  The biggest benefit is that a trust allows you potentially to avoid probate entirely, because the property and assets are distributed under the trust.  However, there are alternatives to trusts as well, such as life estates and joint accounts, which also can avoid probate.  Bottom line – talk to an estate attorney.

Attorney Christopher D. Smith, Sr. is a Board Certified Consumer Bankruptcy Lawyer by the American Board of Certification.  SmithLaw is located in Lakewood Ranch, Florida.  Attorney Smith concentrates in bankruptcy, civil litigation, probate, estate planning, and elder exploitation cases in the Sarasota and Bradenton area.  Call 941-202-2222 to learn more.  SmithLaw offers free consultations in certain areas, including consumer bankruptcy, probate, and personal injury matters.

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