Probate is the legal process of estate administration. If you use a will, you would name an executor to carry out your final wishes, and the probate court would provide supervision. This court would also be involved if you were to pass away without any estate planning documents at all.
In some instances, a child or an incapacitated adult will need a guardian. This is another matter that would be handled by the probate court.
In this post, we will look at five things you should know about probate. After you digest this information, you will be able to make more informed estate planning decisions.
Probate Is Time Consuming
You would probably like your heirs to receive their inheritances in a timely manner. Unfortunately, when a will is admitted to probate, a waiting game will begin. Creditors are given an opportunity to come forward seeking satisfaction, and the court will determine the validity of the will.
If there are no particular complications, it will take a minimum of six months for probate to run its course. More complicated cases can be stalled in probate for considerably longer periods of time.
Probate Is Not Free
There are a number of different expenses that will typically accumulate during the probate process. The executor is entitled to remuneration, and a lawyer and an account will often be engaged. Appraisal and liquidation costs can arise, and there can be incidental expenses.
This money is essentially coming out of the pockets of the people that will be receiving inheritances eventually.
Probate Records Are Available
Probate is a public proceeding, so the records are available to anyone that has an interest in them. This loss of privacy is disconcerting in a general sense, and the knowledge can potentially cause hard feelings among some people that were close to the decedent.
It Can Be Avoided
If the drawbacks that we described above do not sound very appealing, you could proactively implement a probate avoidance strategy. This can revolve around the utilization of a revocable living trust.
Many people shy away from trusts because they harbor a misconception. They think that you surrender all control of assets that you convey into a trust. When you use a revocable living trust, you can act as the trustee and the beneficiary, so there is no loss of control.
As the name would indicate, you also have the power of revocation. If you want to dissolve the trust entirely and take back direct personal possession of the property, you can do so.
You name a trustee to succeed you in the trust declaration, and your heirs would be the beneficiaries of the trust. After you pass away, the trustee would be able to distribute assets to the beneficiaries in accordance with your wishes outside of probate.
This is one benefit, but there are a number of others. You can include spendthrift provision to protect the principal from the beneficiary’s creditors. It is possible to instruct the trustee to provide limited distributions on a monthly basis, or you can choose another payment schedule.
The trustee will step into a turnkey situation, because the assets that comprise the estate will be the property of the trust. You can also name a disability trustee that would be empowered to manage the trust in the event of your incapacity.
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We have developed an estate planning worksheet that serves as a very effective learning tool if you would like to build on your knowledge. It is being offered free of charge, and you can visit our worksheet access page to get your copy.
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