A lot of people assume that a will is the simplest estate planning document, and assets get into the hands of the inheritors quickly when a will is utilized. In reality, this is simply not the case.
If you create a will, you name an executor in the document to act as the administrator. This person would not be able to conduct the business of the estate on their own without any supervision.
The will would be admitted to probate, and the court would preside while the estate is being administered by the executor. In this post, we will share four things that you should know about probate so you can make fully informed decisions when you plan your estate.
Probate Is Time Consuming
There is a simplified probate process in Connecticut that can be used under very limited circumstances. If there is no real estate and the value of the estate is $40,000 or less, this process could potentially be utilized.
Creditors are given time to come forward seeking satisfaction during probate, and the executor must identify and inventory the assets and prepare them for distribution. Depending on the nature of the property, the liquidation process can take a good bit of time.
The full probate process will take about eight months at minimum, and no inheritances are distributed while the estate is being probated by the court. There is no reason why you would not want your loved ones to receive their inheritances in a timely manner, so this is a major negative.
Costs Accumulate During Probate
Probate is not free. The executor is entitled to remuneration for their time and effort, and the court charges a fee that is graduated based on the value of the estate.
In many cases, the executor will bring in a probate lawyer, and an accountant may also be engaged. There are appraisal and liquidation costs along with incidentals to add to the red ink. By the end of the process, somewhere between three and seven percent of the estate will typically be consumed.
Probate Records Are Readily Available
Most people like to keep their financial decisions confidential, and this would logically extend to your estate planning choices. Probate records are available to the general public, so anyone that is interested can access probate records to find out everything that transpired.
This loss of privacy is generally disconcerting, and the information can potentially cause hard feelings among people that had an interest in the estate.
Probate Can Be Avoided
The last thing you should know about probate is the simple fact that it can be avoided if you take the right steps in advance.
If you use a revocable living trust as the centerpiece of your estate plan instead of a will, you would act as the trustee while you are alive and well. There would be no loss of control of the assets, and you could change the terms or dissolve the trust entirely if you choose to do so.
You would name a successor trustee, and your heirs be the successor beneficiaries. After your passing, the trustee would follow your instructions and distribute assets to the beneficiaries. These distributions would not be subject to probate.
In addition to the probate avoidance benefit, you can include a spendthrift clause that would protect the principal from the beneficiary’s creditors. You also have the ability to dictate limited distributions over an extended period of time to prolong the viability of the trust.
Many elders become unable to make sound decisions late in their lives due to cognitive impairment. When you have a living trust, you can name a disability trustee to assume the role if it ever becomes necessary.
We Are Here to Help!
As you can see, you have options when you are planning your estate. The right way to proceed will depend upon the circumstances, and this is why you should discuss your situation with a licensed attorney.
If you are ready to take that step, you can send us a message to request a consultation appointment, and we can be reached by phone at 860-548-1000.