It’s said that probate was designed to ensure that your wishes are honored and your family is protected after you’re not around to oversee matters yourself. During the process, an impartial court supervises everything, looking out for the interests of both your family and your creditors.
What’s wrong with that? A lot, actually.
Here are five reasons why you should avoid probate.
1. Probate is Public
A will is a very private document, revealing much about both financial and family matters. Yet few people realize that it becomes a public record after its writer dies. As such, it can be viewed by anyone simply by going to the courthouse and asking.
So if you’re even remotely well-known in your community, reporters might poke around to see if there’s anything newsworthy to dig up.
If, however, you arrange for your property to pass outside of probate, no documents are filed with a court. What you leave to whom stays private.
2. Probate is a Waste of Money
Probate costs vary from state to state. Yet it’s often estimated that probate attorney, court, and other fees take away about 5 percent of the value of property left behind at death.
So if you left behind a $200,000 estate, probate may cost about $10,000. But if you left behind a $400,000 estate, the whole process would cost about $20,000.
This means that much less goes to the family members and charities that you wanted to receive it. Even worse, if the estate is complicated or disputed, fees can get even higher.
Probate costs might be justified if the process actually benefited the families. But a lot of times, there’s no conflict, so there’s no need to be in court.
For instance, say a man leaves a will that gives everything to his widow and children, which is common. No one challenges the validity of the will, and the family is willing to pay whatever bills he left and divide the property according to his wishes.
Why have a long court proceeding, formal notification of relatives and creditors, and expensive publication of death notices in the newspaper? The property just needs to be handed over to the new owners, which probate-avoidance methods can do.
3. Probate Takes Too Long
Like probate costs, this also depends on where you live and what you own. Yet it’s not uncommon for the entire probate process to take a whole year. During that time, beneficiaries generally get nothing unless the judge grants the immediate family an allowance.
In some states, this amount is a measly few hundred dollars. But the family is forced to ask the court to use its own money – a demeaning experience.
Delay can be more than just annoying – it can cause major life disruptions. What if you’re about to enter college, but can’t pay tuition because your father’s assets are tied up in probate for years? Or what if you’re a surviving wife who can’t move to take a new job?
4. Probate is Required in Each State
If the regular probate process isn’t discouraging enough, you may also need to go through an out-of-state probate. For instance, if you own real estate in another state, it’s usually necessary to have a whole separate probate proceeding there as well.
That means finding a lawyer in each state and paying for multiple probate proceedings. More time is spent, and more money is wasted.
5. Probate May Be More Complex in Your State
Some states have adopted the Uniform Probate Code, which simplifies the probate process. In these states, probate is likely to be quicker and cheaper, consisting of just paperwork.
But if you don’t live in one of these states, the probate process could be more complicated.
Are you taking action to avoid the probate process?