“Probate” is one of the dirtiest words in all of estate planning. Many clients focus on setting up their estate and their will with the express purpose of avoiding probate. And certainly, probate court can be a headache — an expensive headache — for a client’s heirs.
But for some clients, going through probate isn’t really so bad. Probate, after all, is the normal course for processing a person’s will. It’s simply designed to manage, settle and distribute the client’s property according to the terms of the will.
Some people may spend so much time and energy avoiding probate that it ends up costing them money in the end. In certain instances, probate will be both difficult to avoid and not much of an issue for the heirs involved. Here are some things to tell probate-fearing clients to help calm them down:
1. It doesn’t have to take forever. For many estates, probate is a normal, uneventful process. While it can indeed take years in some instances, for most routine estate settlements, it’s not nearly that bad. In Florida, for instance, the average probate process is about six months. One study showed that in Texas, the beneficiaries of a will tend to get their payout four to eight months after the onset of the probate process. Some other states move even faster than that. For the proper, legal disposition of a person’s entire possessions, that’s not so bad.
2. Smaller estates can have it even easier than that. In California, for example, $100,000 in assets can be passed through a will without having to go to probate court. Many states also have an expedited probate process for smaller or less complicated estates.
3. A living trust can only do so much. Many clients try to avoid probate by loading all their assets into a living trust, but they shouldn’t depend on everything being covered. Inevitably, the client will accumulate something too late in life to add it to the trust, or something will get overlooked. An open-ended will should make sure to cover everything else – and that everything else is likely to have to go through probate.
4. Divesting a client of all property can be pretty dicey. Some people try to avoid probate by putting all their assets into a co-ownership, generally with their spouse but also, occasionally, with their children. The right of survivorship means that those assets would pass directly to the co-owner of the client. But it also means the client has to surrender full control over all his or her assets. And if the spouse dies first, it creates a lot of headaches.
5. Probate can help the estate deal with creditors. The probate process generally puts limits on how long the decedent’s creditors are allowed to make claims against the estate. In California, for instance, if creditors do not submit their claims on the estate within four months after the executor is appointed, they risk forfeiting all claim to the money they’re owed. Without the probate process, heirs can find themselves subject to creditors’ claims for years.
6. It can help assure that the client’s wishes are carried out. This, after all, is the whole purpose of probate: it’s a court of legal standing ensuring that the property is properly and lawfully distributed in the manner that the decedent wished. If the client is expecting any disputes among his or her heirs, or if there’s a family member who might try to bigfoot their way into a disproportionate inheritance, probate might actually end up working in everyone’s favor.
Probate is no fun, and for a large or complex estate, it can indeed be lengthy and expensive. But it’s not the end of the world. Clients who do things like push all their assets into a joint tenancy for no reason other than to avoid probate may find that causes more headaches than it’s worth. And even a lot of careful planning might not be enough to avoid it in the end. Most wills, after all, do go through probate.
Sure, we all want to keep our loved ones from having to deal with extra bureaucracy and expense after we’re gone. But don’t let the probate tail wag the estate-planning dog.
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