Three Reasons to Avoid Probate
When you pass away, your family may need to sign certain documents to claim their inheritance as part of a probate process. This can happen if you own property (like a house, car, bank account, investment account, or other assets) only in your name and you have not completed a beneficiary, pay-on-death, or transfer-on-death designation. Although having a will is a good basic form of planning, a will does not avoid probate. Instead, a will simply lets you inform the probate court of your wishes—your loved ones must still go through the probate process to make those wishes legal.
Now that you have an idea of why probate might be necessary, here are three key reasons why you may want to avoid probate, if possible.
1. It is all public record.
Almost everything that goes through the courts, including probate, becomes a matter of public record. This means that to wind up your affairs properly (i.e., pay your bills, file any remaining tax returns, and distribute your money and property to your chosen recipients), documents—including associated family and financial information—could become accessible through the probate court to anyone who wants to see them. This does not necessarily mean that account numbers and Social Security numbers will be made public, as the courts have at least taken some steps to reduce identity theft risk. But what it does mean is that the value of your accounts and property, creditor claims, the identities of your beneficiaries, contact information for your loved ones, and even any family disagreements that affect the distribution of your money and property may be publicly available. Most people prefer to keep this type of information private, and the best way to ensure discretion is to keep your affairs out of probate.
2. It can be expensive.
Thanks to court costs, attorney’s fees, personal representative (executor) fees, and other related expenses, the price tag for probate can easily reach into the thousands of dollars, even for small or simple matters. These costs can easily skyrocket into the tens of thousands or more if family disputes or creditor claims arise during the process. Your money and property should go to your loved ones, but a significant portion could go to the courts and legal fees instead if it goes through probate.
Of course, setting up an estate plan that avoids probate does have its 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 in the future, especially when you consider that your loved ones may be making decisions while grieving. With proper planning, you can minimize the risk of costly conflict and reduce or eliminate some costs; if there is no probate case, there will not be any probate filing fees or court costs.
3. It can take a long time.
While the time frame for probating an estate can vary widely by state and by the value, amount, and complexity of the deceased person’s accounts and property, probate is not generally a quick process. It is not unusual for probates, even seemingly simple ones, to take six months to a year or more. During this time, your beneficiaries may not have easy access to the money and property you intended to leave them. This delay can be especially difficult for loved ones experiencing hardship who might benefit from a faster, simpler process, such as the living trust administration process. Bypassing probate can significantly expedite the disbursement of money and property so that beneficiaries can benefit from their inheritance sooner.
If you have property in multiple states, a version of the probate process must be repeated in each state where you hold property. This repetition can cost your loved ones even more time and money. The good news is that with proper trust-centered estate planning, you can avoid probate in all states, simplify the transfer of your financial legacy, and provide your family with lifelong tax savings and asset protection. To learn more, call us today at 301.892.2713 or click here to schedule a complimentary Estate Planning Discovery Session. Our priority is caring and establishing relationships with our estate planning clients and their loved ones.
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This information is for educational purposes only and should not be considered legal advice.