Probate — people often consider it a dirty word. Especially those who have gone through the probate process. But for the rest of us, what even is probate? The Black’s Law legal dictionary defines ‘probate’ as the “legal process to determine the validity of a will.” In layman’s terms, it’s the process of the court appointing one person to wrap up your affairs after you pass away. After the death of a loved one, your family may need to sign certain documents as part of a probate process in order to claim their inheritance. This can happen if you own property (like a house, car, bank account, investment account, or other asset) in your name only and you have not completed a beneficiary, pay-on-death, or transfer-on-death designation. Although having a will is a good basic form of planning, a will does not avoid probate. Instead, a will simply lets you inform the probate court of your wishes—your loved ones still have to go through the probate process to make those wishes legal. Now that you have an idea of why probate might be necessary, here are three key reasons why you (and your loved ones) may want to avoid probate, if at all possible.
Reason One to Avoid Probate – It is all public record.
Almost everything that goes through the courts, including probate, becomes a matter of public record. This means that in order to properly wind up your affairs (i.e., pay your bills, file any remaining tax returns, and distribute your money and property to your chosen recipients), documents—including associated family and financial information—could become accessible through the probate court to anyone who wants to see them. This does not necessarily mean that account numbers and Social Security numbers will be made public, as the courts have at least taken some steps to reduce the risk of identity theft. But what it does mean is that the value of your accounts and property, creditor claims, the identities of your beneficiaries, contact information for your loved ones, and even any family disagreements that affect the distribution of your money and property may be publicly available. Most people prefer to keep this type of information private, and the best way to ensure discretion is to keep your affairs out of probate.
Reason Two to Avoid Probate – It can be expensive.
Thanks to court costs, attorney’s fees, executor fees, and other related expenses, the price tag for probate can easily reach into the thousands of dollars, even for small or simple matters. These costs can easily skyrocket into the tens of thousands or more if family disputes or creditor claims arise during the process. Your money and property should be going to your loved ones, but if it goes through probate, a fairly sizeable portion could go to the courts and legal fees instead.
Of course, setting up an estate plan that avoids probate does have its own costs. Benjamin Franklin wrote, “An ounce of prevention is worth a pound of cure.” Like the “ounce of prevention,” costs you incur now to put a plan in place are more easily controlled than uncertain costs in the future, especially when you consider that your loved ones may be making decisions while grieving. With proper planning, you can minimize the risk of costly conflict and also reduce or eliminate some costs; if there is no probate case, there will not be any probate filings fees or court costs.
Reason Three to Avoid Probate – It can take a long time.
The thing about probate is that the process varies from state to state. Luckily, the process in Texas is fairly quick and straightforward, with the average amount of time being between three to six months. And while that’s relatively quick, the process still doesn’t happen overnight, and can leave loved ones waiting to receive inheritance for longer than you’d prefer. Bypassing probate can significantly expedite the disbursement of money and property so that beneficiaries can benefit from their inheritance sooner.
Be sure you remember, if you have property located in multiple states, a version of the probate process must be repeated in each state in which you hold real property (real estate). This repetition can cost your loved ones even more time and money.
Avoiding probate is the most cited reason for people to visit estate planning attorneys, and as you can see there are good reasons for wanting to spare your loved ones the hassle and headache. The good news is there are estate plans which can cut down the potential for your estate having to go through probate. So, if you have a plan that could use an update, or if you’ve never drafted an estate plan before, we can help you be prepared for the future. Nielsen Law PLLC provides family focused estate planning and probate services in the Austin, Round Rock, Cedar Park, and the Central Texas area. For more information and to learn about our firm, please contact us.