When you are planning your estate, the primary reason why it requires “planning” aside from simply deciding who will be the direct recipients of your assets after you pass away, is to make sure that your resources remain intact during the process of transfer. Ideally you would also like your heirs to receive their inheritances in a timely manner with minimal administrative hassles. This is why many people choose to create revocable living trusts as their primary instrument of transfer rather than wills.
When you use a basic will as your vehicle of transfer your estate must pass through the process of probate, which is when the probate or surrogate court will determine the validity of the will and supervise its administration by the executor or personal representative.
This process can take a good bit of time; depending on the complexity of the estate and whether or not the will is being contested, the process of probate could take anywhere from perhaps nine months to several years. Of course your family members will not receive their inheritances until probate has ended and the estate has been formally closed. So probate does result in the type of “administrative hassles” that you would ideally like to avoid.
Probate can also be expensive, sometimes eroding the overall value of your estate by as much as 5% to 7%. The probate court itself charges a fee, and there will be legal and executor fees. In many cases, the executor will have to bring in an accountant to handle taxes, an appraiser or multiple appraisers, and an estate liquidator and all of these entities charge a fee.
The great appeal of the revocable living trust lies in the fact that these vehicles enable the transfer of your assets to your loved ones outside of the probate process. As a result, you avoid the expenses and time consumption that go along with probate and your loved ones receive their inheritances quickly, efficiently, and outside of the public eye.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.