Probate is the process to distribute someone’s estate after their death through court proceedings. A typical probate can take anywhere from six to twelve months, sometimes longer. Avoiding probate also requires time or money, sometimes both. If you’re looking to discuss whether to make the investment to spare you and any other heirs the expense and hassle, we have listed a few things to consider below.
If you or a loved one have died with a lot of debt, probate can help you by limiting the amount of time creditors have to make claims against you and your estate. If there isn’t enough money or assets to pay your creditors, the probate court decides how to pay each creditor. Without probate proceedings, creditors may surface after your assets have been distributed and sue your heirs or whoever was designated as Administrator of your estate. Probate also provides supervision from the Court itself, which can help make sure that the decedent’s wishes are carried out. The Will and the details of the estate are made public, which is a deterrent for greedy or contentious heirs who might try to disregard the letter of the Will. All of the estate assets, debts, and costs paid from the estate have to be disclosed to the court, and the court has to approve distribution of funds.
Some states offer simplified probate for smaller estates, which may potentially shorten the time probate would take and possibly cost. What would fall under “small” would vary depending on where you live. The definition of “small” generally is determined by the value of the estate not including assets that go directly to heirs, such as jointly held property or accounts that have a designated beneficiary. Retirement funds or life insurance policies generally require a designated beneficiary, and bank or brokerage accounts can have a designated beneficiary as well. Many states also have “transfer on death” deeds for real estate. There are even states that will allow you to register a vehicle with a specific form that designates a beneficiary. Both of these will allow property to be transferred without the use of probate. You may not necessarily be able to split your estate exactly the way you want to by simply using beneficiary designations and “transfer on death” forms, however. You may also want a more comprehensive solution, especially if you want a lot of assets to be covered or complicated finances.
Living trusts are another way to avoid probate proceedings. Living trusts are legal documents intended to allow you to detail how you want your property split apart and who would take over care of your surviving minor children. Unlike a will, Living Trusts take effect while still alive. Once a living trust has been created, you are required to transfer ownership of your property to the trust itself. This transfer requires moving titles and deeds to the trust to avoid probates. Trusts are revocable, which means you can change them at any time. You will be the trustee yourself, which means you continue to have control over your own property, and you name a successor trustee, or trustees, who take over if you somehow become incapacitated or die.
Living trusts can be expensive and you can create your own without an attorney, should you want to, using self service software or do-it-yourself legal sites. We recommend consulting one if you have a large estate or could foresee problems with heirs who may challenge your estate plans.