WHAT IS PROBATE – WHY IT IS TO BE AVOIDED

DEFINITION OF PROBATE:  Probate is the process of “proving” the Last Will and Testament, and making sure the title of the property is “clear”.  Probate is not necessary for all estates, but it is necessary to establish ownership of the property if the value of the estate is $30,000 or greater, or if real estate is included in the estate. 

The title to a car or house must be proven to a buyer, so too must the title to assets in an estate be proven. 

No court will direct the holder of a Will to go through probate – the purpose of probate is to establish clear title to the property of the estate.  If your spouse dies, and you don’t plan to ever sell any of the property, you don’t have to go through probate.  However, if you ever wish to sell your home, car, or other assets that were held by you and your former spouse, you would have to have clear title, and this “clear title” is established by probate.

It is the responsibility of the Executor to oversee the probate.  Probate is a complicated and time consuming process involving time in court, money and time spent with attorneys, and a good measure of frustration.  The complexity of probate grows with the size of the state.  The steps required for a simple estate will go something like this:

The Executor of the estate must:

• Safeguard all the assets;
• Petition the court for probate of the will;
• Assemble and inventory all of the assets;
• Get appraisals of all of the assets;
• Administer the estate according to the wishes expressed in the Will;
• Prepare and file final tax returns;
• Settle all claims by creditors and family members;
• Publish notice to creditors in the newspaper
• Distribute the property of the estate;
• Obtain final discharge from the court.

As you can see fro this abbreviated list probate can be a complicated, expensive and time-consuming process.  Problems will multiply if one of the parties challenges the Will at any point in time. 

Most probates take at least two years to complete.  Many wills are challenged.  If one of the heirs or family members can demonstrate that the intent of the writer of the Will changed after the Will was written, the court can rule against the Will.  If the Will is challenged, it must go through probate.  For example, if a disinherited son claims that the deceased father would have given him part of the estate if the Will was written later, that son may gain some of the estate – even if the Will expressly left him out!

 Approximately 20% of Wills are successfully challenged in court!  That means that out of every 10 Wills that are challenged in court, two of them will be thrown out by the court.  In other words, the Will that you wrote may be challenged and changed by a court after you are deceased.

COSTS OF PROBATE:  There are at least four different costs that can occur in probate:

1. Legal Costs.  Probate normally costs from 5 to 10% of the estate.  This cost includes lawyer’s fees, court costs, and costs of witnesses and publishing.
2. Family Costs.  Probate also causes friction between family members.  The longer a probate drags on, the more family members and other people involved with the estate are likely to disagree and have tension
3. Publicity.  Probate requires publishing information about the estate.  The property involved, and who will receive the property must be published in the newspaper for all to see.
4. Complexity.  You may have to do more than one probate.  If the person making the Will had real property in more that one state, probate must be conducted in each of those states.

As you can see, probate can be a long expensive hassle that hurts the family at the worst possible time.  The good news is that it is entirely possible to avoid probate completely.

WAYS TO AVOID PROBATE:  There are ways to partially or completely avoid probate.  If done properly, even a Will can help the probate proceedings.  The following examples are ways to avoid or help a probate proceeding:

1. Last Will.  A Last Will and Testament will not avoid probate.  Most people think that a Will can be used to avoid probate.  A Will can make probate easier and faster, but will not prevent probate proceedings.
2. Joint Tenancy.  Owning your property in Joint Tenancy will avoid probate on that property on the death of the first spouse only.  Probate will still be necessary upon the death of the second spouse.  Also, any property not owned as Joint Tenants will have to be probated.
3. An Estate of Small Value.  If the value of the estate is less than the minimum required for probate under state law, no probate is required.  The minimum amount varied from $30,000 - $60,000.  Usually if any real property is owned, there must be a probate to prove title.  Keep in mind that this minimum value will be at the time of death, not when the Will is written.  If the assets in the will have increased in value because of inflation into the $30,000 - $60,000 range, probate will be necessary.
4. Living Trust.  This is the best way to avoid probate.  The estate will be settled quickly, in private, with the property going exactly where it was intended to go.  A living trust is almost immune to legal challenges.  It is fast and efficient, and also has tax advantages.