If you were to use a will to express your final wishes with regard to your asset distribution choices, you would name an executor in the document. This person or entity would not be able to act independently. The will would be admitted to probate, and the court would provide supervision during the administration process.
During probate, final debts are paid, including taxes. The court examines the will to determine its validity, and if anyone wants to issue a challenge, they could make their case during probate.
It definitely serves a purpose, but if you are the rightful heir to an inheritance, you are probably not going to view probate in a positive light. Let’s look at some of the drawbacks.
Loss of Privacy
Have you ever wondered why the press can sometimes share details about the way the assets were distributed after famous people pass away? The reason why they can obtain this information is because probate is a public proceeding. Anyone that is interested can access probate records to find out exactly what transpired during the process.
This loss of privacy is disconcerting in a general sense, and it can yield negative emotional consequences. When the information is available, some people that were close to the decedent may feel as though they were treated unfairly. This can cause hard feelings among family members or close friends.
The heirs to an estate cannot receive their inheritances while probate is underway, and the time lag is considerable. If there are no complications, it will take a minimum of about nine months for the probate process to run its course. Complex cases can drag on in probate for considerably longer periods of time.
Probate is not free by any stretch of the imagination. There is a court filing fee, and there can be probate attorney fees. The executor is entitled to compensation, and they may bring in an accountant, appraisers, and liquidation resources. These expenditures reduce the value of the estate before it is distributed to the inheritors.
Probate Avoidance Strategy
If all of the above does not sound very appealing, you can proactively implement a probate avoidance strategy when you plan your estate. A revocable living trust is a great choice for many people that want to avoid probate. You do not have to worry about losing control of the assets, because you can act as the trustee and the beneficiary while you are living.
In the trust declaration, you name a successor trustee to assume the role after you are gone. Your heirs would be named as the beneficiaries, and you would leave behind instructions for the trustee to follow in the trust agreement. After your death, the trustee would distribute assets to the beneficiaries in accordance with your wishes, and the probate court would not be a factor.
The avoidance of probate is one benefit, but there are a number of others. You can account for latter life incapacity through the inclusion of a disability trustee. A spendthrift provision can be added to protect assets that you are leaving to a loved one that is not good with money.
It is also possible to dictate specific terms with regard to the nature of the distributions. For example, you can instruct the trustee to distribute a certain amount each month for a number of years. You could then allow for larger lump sum distributions when the beneficiary reaches certain age plateaus.
We Are Here to Help!
Now is the time for action if you are going through life without an estate plan. We can also help if you have an existing plan that has not been reviewed in many years, because changes may be necessary.
We invite you to attend an upcoming free living trust webinar to learn more about living trust estate planning. To see a webinar schedule and to register, follow this link.