Creating a successful estate plan typically requires you to incorporate numerous inter-connected goals and objectives into one comprehensive plan. As you may have heard from friends or family, probate avoidance is a popular estate planning goal. In order to decide if you should make probate avoidance one of your goals, however, you need to have a firm understanding of why you might want your estate to avoid probate.
Probate Process Basics
Probate is the legal process that is typically required after the death of an individual. Probate is intended to serve several functions, including the authentication of a Last Will and Testament submitted on behalf of the decedent. Probate also serves additional functions, such as:
- Ensuring that estate assets are identified, secured, and valued
- Notifying creditors of the estate and providing an opportunity to file claims against the estate
- Identifying and locating heirs of the estate
- Litigating any challenges to the Will or disputes with creditors
- Paying federal (and state in some cases) gift and estate taxes
- Transferring the remaining estate assets to the named beneficiaries and/or legal heirs
Reasons to Avoid Probate
There are several reasons why probate avoidance is such a common estate planning objective. To begin with, probate is a lengthy process. In California, creditors of the estate have four months within which to file a claim against the estate. This means that practically speaking it will take a minimum of six months for almost any estate to make it through the probate process. Due to congestion in the courts, most cases take months longer. The more complex your estate assets are and/or the more valuable your estate is, the longer it will generally take to get through probate. Moreover, any challenges filed with the court could extend the time necessary to complete probate by many months or years. Keep in mind that probate assets cannot be distributed to the intended beneficiaries until the end of the probate process, meaning your loved ones could be forced to wait a long time before receiving their inheritance.
Another reason to avoid probate is the cost involved in the probate of an estate. Everyone involved in the probate process is entitled to compensation. This typically includes the Executor of your estate, accountants, attorneys, appraisers, and real estate professionals. Those expenses are paid out of your estate, meaning the value of the estate that is finally passed down to your loved ones may be considerably less than what you actually left behind after all those bills are paid.
Privacy is yet another reason people often aim to avoid probate. Once your Last Will and Testament is submitted to the appropriate probate court it becomes public record. Consequently, the terms of your Will also become easily accessible. For anyone who prefers to keep the details of their estate plan private, avoiding probate is a must.
How Can My Estate Avoid Probate?
The good news is that there are numerous estate planning tools and strategies that can help your estate avoid probate. For many people, the most important probate avoidance tool is a trust. Unlike gifts made in your Will, assets held in a trust do not go through probate. Consequently, the terms of the trust agreement can dictate that those assets be disbursed as soon after your death as you choose and to as many beneficiaries as you designate. Moreover, a trust can also provide incapacity planning benefits as well as be used to protect the inheritance of a minor child until he/she reaches the age of majority. Another key to avoiding probate is to convert probate assets to non-probate assets. The fewer assets that are required to go through the probate process, the less time is will usually take to get through the process. Converting assets to non-probate assets, when possible, certainly helps. Changing the manner in which assets or accounts are titled will often convert a probate asset to a non-probate asset. Titling real property jointly with rights of survivorship, for instance, allows that property to pass directly to the co-owner, outside of the probate process, upon your death. Consult with your estate planning attorney about the best way to ensure that your estate avoids probate.
Contact Sacramento Estate Planning Attorneys
Please download our FREE estate planning checklist. If you have additional questions about how to avoid probate, contact us at the Northern California Center for Estate Planning & Elder Law today by calling (916)-437-3500 or by filling out our online contact form.