What are the Advantages of Probate Avoidance?
What are the advantages of probate avoidance? Why would anyone seek to avoid probate? To understand the answers to these questions, an explanation of the probate process is required.
What is Probate?
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 while someone is still living, if they become mentally incompetent and they have failed to plan for financial, medical, long-term care, and end-of-life decisions.
Probate is a process that can be costly—and courts and judges impose the rules—all to grant rightful beneficiaries control over (and/or ownership of) assets to which they already are entitled.
For example, when two people purchase real property, they don’t always understand that, if one of them dies, the surviving co-owner does not own or control 100% of the property automatically. Instead, the surviving co-owner must obtain authority to sell, refinance, gift, or do anything else with the decedent’s portion of the property by going through the probate process. Only after a judge appoints an administrator or executor of the decedent’s estate can the surviving co-owner take these types of actions concerning the decedent’s part of the property.
Similarly, if someone becomes incapable of making their own financial, medical, or end-of-life decisions, a probate court must appoint a guardian to handle all those matters (unless the incapacitated person—also referred to as the “ward”—already has designated someone to make those decisions). Without documented choices for a preferred guardian, a court chooses the individual who seems best qualified, but they may be a person the ward would not choose.
Probate is Public Record
Probate is a public process. In other words, a written record of a decedent’s assets (including their value) and debts (including the names of creditors and how much each is owed) is filed in the probate court. The decedent’s Last Will and Testament (if one exists) is also filed in the probate court. Anyone can see these documents and/or obtain a copy of them. In this age of increasing identity theft, this is a part of the probate process that bothers many people.
Don’t Let the Probate Court Decide Your Child/Children’s Future
Parents have the right to designate guardians for their minor children. This is done in their Last Wills and Testaments. When parents die or become incapacitated and fail to document this choice properly, the probate court can appoint 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.
When a minor child receives an inheritance, the probate court can exercise control over those assets until the child reaches the age of 18. Under such circumstances, the child’s guardian would seek permission from the court each time inheritance funds are necessary to care for the child. When the child reaches 18 years of age, they are “adults” under the law, and they may receive their entire inheritance outright (i.e., with no continuing supervision or rules to govern the use of the assets). Therefore, it is important to understand that proper planning can delay the distribution of inheritance beyond the age of 18 while still providing for a beneficiary’s healthcare, education, maintenance, and support at any age.
A Last Will and Testament Does Not Avoid Probate
Contrary to popular opinion, a Last Will and Testament does not help anyone avoid probate. A Last Will and Testament may require probate if certain types of assets (real property for example) are part of a decedent’s estate.
Speak to an Experienced Attorney about Options to Avoid Probate
At Anderson Estate Planning, our attorneys have the knowledge, resources, tools, and strategies to assist with probate, or to help you avoid it altogether if that is your desire. Call us at 469-207-1529 or click on the button below to schedule a confidential consultation.