The process of probate is something to consider when you are planning your estate. To understand probate, look at your estate as a business entity of sorts. There are various different parties that have an interest in this entity. Probate gives these parties the opportunity to conduct business with the estate.
When you think about parties that have an interest in an estate, the heirs to the estate are certainly going to come to mind. However, they are not the only interested parties. When you pass away, you may well have outstanding debts. Creditors are interested parties as well.
During probate all outstanding debts that are valid must be paid out of the assets that comprise the estate.
If someone wanted to challenge the will, his or her argument could be presented before the probate court. It would be up to the court to determine whether or not the will is in fact valid.
The executor must prepare the assets that comprise the estate for distribution to the heirs during probate. This can involve appraisals and liquidations.
Probate is not something that is inherently negative. The powers that be do everything possible to streamline the process. However, there are some drawbacks that go along with probate that simply cannot be avoided.
For one thing, probate is time-consuming. At minimum it will take months for an estate to be probated. Probate can drag on for years under certain complicated circumstances.
People who are named in the will as inheritors do not receive anything until the probate process has run its course.
Another drawback that goes along the probate process would be the costs that can accumulate. There is a filing fee that the court will charge, and the executor must be paid. The executor will generally engage a probate lawyer and a tax accountant. Obviously these professionals are going to charge for their time.
Appraisers and liquidators are going to charge as well.
Probate is a public proceeding. Privacy is lost when an estate is probated, because anyone who has an interest can access the probate records.
It is possible to arrange for the transfer of your financial assets after you die outside of probate. There are a number of different ways that you can accomplish this goal.
One very popular probate avoidance tool is the revocable living trust. Some people have the idea that trusts are only viable for the wealthy. In fact, revocable living trusts can be quite useful for people of relatively ordinary means who would like to facilitate asset transfers outside of probate.
If you are interested in discussing all of your options with a licensed estate planning attorney, contact our firm to schedule a free consultation.
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.