When you pass away, utilizing a will as your primary vehicle of asset transfer your estate must pass through the legal process of probate. Probate provides certain protections because it ensures the court supervised administration of your estate, but there are pitfalls involved with probate as well.
What are these pitfalls? Interestingly enough, one of the protections that probate provides for those who survive you can be seen as a negative by some. During the probate process interested parties can challenge the will, and this recourse is quite useful for the disgruntled party but you may prefer to keep this avenue closed.
It would be nice if all of your family members honored your final wishes without protest, but things don’t always go so smoothly and no one receives their inheritances while the matter is hung up in probate. Passing along your assets outside of the probate process via a revocable living trust could eliminate the possibility of a contested will. In fact, you could stipulate that anyone who voices displeasure with the terms of the trust be disinherited if that was your choice.
Another good reason why you may want to consider avoiding probate would be to avoid the costs involved. The probate court charges a fee right off the top, and the executor or personal representative of the estate is entitled to a fee as well. In addition, the executor will have to bring in a probate attorney, and he or she may have to engage a tax accountant, appraisers, and an estate liquidation company, but of course all of these entities charge for their services. In all these expenses can add up to over 5% of the total value of the estate in some cases. This is all money coming out of the pockets of your loved ones.
In the final analysis the best way to decide whether or not probate avoidance is the right choice for you would be to discuss the matter with an experienced estate planning attorney who will advise you based on the anatomy of your assets and the specificity of your wishes.
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.