Many people have been told that it is important for people to “avoid probate.” Just because people may have heard that term, that doesn’t mean they know exactly what probate means, why it can be a problem, or how to successfully avoid it. In this post, let's take a look at the term probate to understand exactly what it means and what the process includes so that the idea of avoiding probate makes more sense.
The term probate most literally means “to prove” a will. Today it covers the entire legal process necessary to settle a person’s estate after they die. The appointed executor or representative (usually a family member) opens the probate case in court. With the court’s help, they will work through all of the financial business that the decedent left behind. For example, probate includes disposing of personal property, money, real property or anything else that the deceased owned at the time of their death. Probate also deals with any debts that were in existence at the time of death.
Probate is not inherently evil. It is simply a system that was created to oversee the way estates are handled. However, there is some truth when people say that probate should be avoided, if possible. Some of these cons are listed below.
Probate cases are filed in the court and are in the public record. If for any reason a person wants to maintain a sense of privacy after they die, it could be a good idea to avoid probating the estate in court. Famous people or other potentially controversial people usually don’t want their financial and family affairs dragged out into the open. Even those of us who are not famous would rather a list of all of our assets not be made available for public access. In Texas, cooperating beneficiaries can agree not to file an inventory, but in Florida, an inventory is required to be filed in any full administration. By avoiding probate, one can also avoid this public record.
One reason that wills and estates are probated in court is to allow interested persons the chance to represent their own claim on the estate by challenging or contesting a will that does not favor them. For people with complicated family dynamics, unpopular second marriages, or estranged loved ones, avoiding probate should be a top priority. When an estate is handled through non-probate channels, it becomes much less likely that a will may be successfully challenged. A will can still be challenged, such as for reasons like undue influence, but the road to that challenge is much steeper if no official probate is opened.
Like most things that end up in court, probate can be time-consuming. In more complex estates, the entire process can last months or years. And, while the family waits for this time to pass, the decedent’s assets or property may be slowly losing value or be lost completely.
Probating an estate requires the help of a competent probate lawyer to facilitate the matter. Since the process requires court appearances and extensive paperwork, the legal fees can mount up quickly. With proper pre-planning, much or all of this cost may be avoided. That said, probate in Texas with a properly drafted will, when there are very few debts, should not cost more than a couple or few thousand dollars. Of course, avoiding probate can usually be accomplished for less than that.
Creating a smart estate plan is the best way to avoid probate. You and your attorney can work together to draft the proper legal documents and carefully time asset transfers.
The revocable living trust is an instrument which dictates the management or distribution of property. The property is transferred in title to the trust during the owner’s lifetime. The property owner also chooses someone to act as trustee, an appointed fiduciary who will manage the trust property and any distributions after the death of the trust’s creator.
The other good thing about a trust is that there is no need to involve the court in any way. There is nothing to file and it does not need to be submitted to the probate court. Further, no inventory need be filed, so this administration can be very private.
Another way to avoid probate hassles is by placing your assets into joint ownership with your future beneficiaries. This way, when you pass away, the ownership interest will automatically transfer to the joint owner. That said, please do not try to do this on your own. Seek the advice of an experienced estate planning attorney to be sure this is a good option for your situation.
Payments on death accounts (POD) have a designation that names a person who will receive the assets in the account when the original account owner dies. At the same time, transfer on death (TOD) is a designation on the title or deed to a piece of real estate or a car which will automatically change ownership once the owner dies. Like joint ownership, though, big risks come into the picture when this is handled incorrectly or without taking everything into consideration.
Some people assume that the easiest way to avoid probate is to give everything away before you die. However, doing this could cause problems for seniors when they may need to qualify for assistance for long-term care. Especially important for your loved ones too, this can have drastic tax consequences.
Hopefully, these tips will help you and your family plan responsibly for the future. For more information, please contact McCreary Law Office or call the Jacksonville, FL office at 904-425-9046 or the Houston, TX office at 713-568-8600.
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