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Fighting over control of an estate

Although uncommon, there are situations when probate may be a better option

by Curtis Lee | Contributor
November 15, 2019

Due to time, money and privacy considerations, most people will want to avoid probate when handling a decedent's estate. But in certain situations, such as when there is disagreement over the distribution of assets, it will probably be good for the estate to go through the court-supervised probate process.

If you've been looking for estate planning advice, then you've probably come across a lot of people who tell you to avoid probate. Why is this recommendation so common? The short answer is that probate can potentially cost unnecessary time and money. But is probate always a bad idea? No, but before we explain why, let's look at what probate is and why so many people recommend to avoid it.

What is probate?

Probate refers to the legal process where property passes from a deceased person to another person or organization. To put it more bluntly, it decides who gets someone's stuff when they die. During the probate process, several tasks will take place, such as:

  • Identifying all the assets and debts of the deceased.
  • Confirming that the deceased's will is valid.
  • Paying off the deceased's debts, including any taxes.
  • Distributing property according to the terms of the will (or if the deceased does not have a will, distributing the property according to the applicable state intestate rules).

The probate process typically consists of processing paperwork, notifying creditors, paying fees and taxes and making sure all the heirs receive the property they are entitled to.

Why avoid probate?

An empty wallet

Time and money are the primary reasons to avoid probate. Depending on the complexity of the estate, it will usually take at least a few months to get through probate, although it can easily take up to a year. Much of this time is spent waiting for potential creditors to respond to published notices. However, probate can last for years if it's large and complex or if there is a legal dispute. For example, someone might contest the validity of the will or argue a different person should administer the estate of the deceased.

Probate can also cost a lot of money. Costs vary by jurisdiction and estate size, but they will often consist of a few thousand dollars in legal fees, court fees and notices. In most cases, it will cost less than 5% of the estate to probate it. In extreme cases, it can cost far more if attorney fees are a percentage of the estate's worth.

Finally, the probate process is public. This means all the financial information of the person who has just died is available to anyone. Should there be a legal dispute during the probate process, embarrassing or private family details may easily come out into the public.

When is going through probate a good idea?

For many people, avoiding probate will save time, money and maintain privacy. But there are several instances where you may be better off having an estate processed by a probate court.

First, if someone dies without a will, it may be unclear who gets what. And depending on who the survivors are, there may be disagreement as to who can inherit the property of the deceased. When someone dies without a will (also known as dying “intestate”), state law will usually set out who is to get what and in what order.

Probate court

The probate process provides some predictability for the administration of an estate subject to intestate statutes. Keep in mind that if you have a will, it will be subject to probate, even if you have property that can skip the probate process.

Second, it's easy to have your chosen guardian legally recognized. Except in extreme cases, a court will honor the deceased's guardian designation request if it's set out in the will.

Third, it provides for debt closure and protection from creditors. When an estate goes through probate, creditors are provided notice that basically says a specific person has died and if the creditor has a debt with the deceased, they only have a specific time window in which to collect. Without probate, this window for creditors to act is usually far larger. Additionally, if the administrator or executor believes a creditor's claim is invalid, probate will often provide a process to contest the creditor's claim.

Fourth, the probate process creates a public record. While many wish to avoid this, not everyone does. Some survivors of the deceased may want as much to be public as possible, especially if there is fear that something devious might occur during the distribution of the deceased's estate.

Fifth, if there is disagreement on how to handle the estate, probate can serve as the time and place to settle the disagreement. Not only will a neutral court be able to make a decision, but it can oversee the distribution process and ensure that individuals receive what they are rightfully owed.

What kind of assets must go through probate?

Unfortunately, there aren't many generalizations when it comes to deciding if a particular type of asset must go (or not go) through probate. In essence, property subject to probate is an asset that does not otherwise have a set of rules for transferring property from the deceased to someone else. The following chart provides some examples of property that is usually subject to probate and property that can usually skip the probate process.

Probate Assets and Non-Probate Assets
Assets Typically Subject to Probate Assets That Can Usually Avoid Probate
  • Property subject to a will
  • Property owned by someone who dies intestate (no will)
  • Property that does not have urvivorship rights. This includes property titled only in the deceased person's name or property owned with another as tenants in common
  • Payable-on-death financial account
  • Property subject to a designated beneficiary
  • Property in a living trust
  • Investment securities registered in transfer-on-death form
  • Property held subject to survivorship rights, such as a joint tenancy, community property with right of survivorship or tenancy by the entirety

How do I create an estate plan?

There are numerous options and scenarios to consider when developing an estate plan that protects your legacy and achieves your objectives, and important decisions should be made with the advice of qualified lawyers and financial experts. Membership with Legacy Assurance Plan provides members with valuable resources and guidance to develop comprehensive estate plans that take life's contingencies into consideration and leave a positive impact for generations to come. Legacy Assurance Plan members also receive peace of mind that a team of trusted, experienced professionals will assist them in developing legal, financial and tax strategies that will meet their needs today and for years to come through periodic reviews.

This article is published by Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at legacyassuranceplan.com.

Phone - 844.445.3422
Email - info@legacyassuranceplan.com

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