Our Estate Planning Blog

Why is Everyone Trying to Avoid Probate?

Why avoid probate?
Probate is not always an efficient process. However, it is the way to properly dispose of an individual’s property after they have died. It gives the necessary stamp of approval that the will is legitimate, and the executor has been confirmed.

Probate can be avoided with proper estate planning, or certain assets can be placed outside of the probate process. But why is everyone trying to avoid probate?

The Street’s recent article on this subject asks “What Is Probate and How Can You Avoid It?”  The article looks at the probate process and tries to put it in real-life terms.

Probate is a process that takes place in a special probate court, with a probate judge presiding over the proceedings. Usually, surviving families and other interested parties initiate the probate process, to address issues relating to the deceased individual’s estate settlement. These include:

  • The handling of the deceased’s valid will;
  • Properly citing and categorizing the deceased’s assets;
  • Appraising the deceased’s estate and property;
  • Paying off any of the deceased’s existing debts; and
  • Distributing the deceased’s property to those directed by the will (or, if there’s no will, the probate court will direct the distribution of estate assets, according to the laws of intestacy).

The executor handling the deceased’s estate will typically start the process. Here are the basic steps:

File a Petition. The estate’s executor will file a request for probate where the deceased resided.  The court will then assign a date to confirm the executor and, once that is done, the probate judge will officially open the probate case.

Notice. The executor must send a notice that the deceased’s estate is officially in probate to all applicable beneficiaries, heirs, debtors and creditors.

Inventory Assets. The executor will then collect, list and present a value for all of the deceased’s assets and supply this to the probate court. An important note here.  If the deceased person owns property in more than one state, it is quite likely that a separate probate process will need to be initiated in every state that property exists.  Thus, if you own a home in Illinois and another in Florida, your estate will have to be probated in both states. In these cases, it is critical to use a living trust or some other method to avoid probate.  Paying 2x the court fees, lawyers fees and administrative costs will cost your estate significantly more than the estate planning to avoid probate will cost.

Pay the Bills. The executor will need to pay all outstanding debts owed by the estate.

Complete Any Tax Returns. In addition to filing taxes for the decedent covering the time he or she lived in the previous tax year, the estate may also have existing tax returns that need to be filed. An accountant can be hired by the estate to work on this, or the executor may choose to file the taxes on his or her own.

Pay the Heirs. The executor can now distribute the remainder of the estate to any heirs, according to the will’s instructions.

Close the Estate. Finally, the executor will file paperwork with the court and file to close the estate.

Obviously, accomplishing all of these tasks takes time.  Indeed, many of them are designed with waiting periods to protect the rights of any interested parties.  And in probate court, time is quite literally money.  A probate attorney will be billing the estate for time spent in court, time spent preparing for court hearings, and time spent engaged in other administrative endeavors related to the case.  Even modest estates can routinely see probate processes drag on for over a year, often eating up a significant portion of the estate’s assets.  

An experienced estate planning attorney licensed to practice in your state will be able to explain what strategies are used to avoid probate, how to remove certain assets from the process, or whether it needs to be avoided at all. A local estate planning attorney is your best resource, because the tools available to avoid probate are often different from state to state.

Reference: The Street (July 29, 2019) “What Is Probate and How Can You Avoid It?”

 

Please Share!

Facebook
Twitter
LinkedIn
Search
Subscribe!