What are the advantages of probate avoidance? Why would anyone seek to avoid probate? In order to understand the answers to these questions, an explanation of the probate process is required.
When someone dies, probate is the government (i.e., court)process by which their debts are paid and their assets are passed to beneficiaries. Probate also occurs when someone becomes mentally incompetent and they have failed to plan for financial, medical, long-term care and end-of-life decisions. Put another way, probate is a process by which attorneys generate significant invoices and courts and judges impose the rules—all for the purpose of granting rightful beneficiaries control over assets.
For example, when two people purchase real property, they don’t always understand that, if one of the them dies, the surviving individual does not own—and does not control—100% of the property automatically. Instead, probate is the process by which the surviving person obtains authority to sell, refinance, gift or do anything else with the property.
Similarly, if anyone becomes incapable of making their own financial or medical decisions, unless they already have designated someone else to make those decisions for themselves, in writing, the probate court has the authority to appoint a guardian to handle all of those financial and personal matters. The appointed guardian may, or may not, be who the disabled person would choose.
Probate is a public process. In other words, a written record of a decedent’s assets (including their value) and debts is filed in the court, as is a copy of their Last Will and Testament (if one exists). Anyone who wants a copy of these records/documents can get one. In this age of increasing identity theft, this is a part of the probate process that bothers a large number of people.
Parents should be aware that they have the right to designate guardians for their minor children. If parents fail to make this choice, in writing, and if they die or become too ill to raise their kids, the probate court can select one or more guardians for each minor child. The guardian(s) chosen by the court may not be the person(s) the parents would desire.
Also, if a minor child is to receive an inheritance, the probate court can exercise control over those assets until the child reaches the age of 18, when the beneficiary would be entitled to the entire inheritance (with no restrictions or supervision). The distribution of assets can be prolonged beyond the age of 18, but only with proper planning.
Contrary to popular opinion, A LAST WILL AND TESTAMENT DOES NOT HELP ANYONE AVOID PROBATE. In fact, a Last Will and Testament may require probate, and it only gives the probate court guidance for the distribution of a decedent’s assets.
If, for any reason, you have a desire to avoid the time, expense, hassle and public nature of probate—or if you would like to prolong the distribution of assets to beneficiaries beyond the age of 18—there are a variety of legal tools and strategies to accomplish these goals. Please contact us to schedule a meeting in which we can discuss, in greater detail, all of the estate planning tools and strategies available to you.