To break estate planning down to its most basic form, most people would like their assets to wind up in the hands of their loved ones quickly, efficiently, and inexpensively. You may think that drawing up a will and making your wishes clearly known will achieve this end, but unfortunately this is not always the case.
When you use a will as your primary vehicle of transfer your estate will be subject to the process of probate. During this interim the probate or surrogate court will attest to the validity of the will and ultimately supervise the administration of estate. This sounds well and good, but the fact is that this does not happen quickly and there are expenses involved as well.
Depending on the jurisdiction and the relative complexity of the estate probate can take anywhere from several months to multiple years to run it’s course. Your heirs will not receive their inheritances until the estate is closed, so this time lag is certainly not something that is welcomed by most families.
In addition there are significant costs associated with probate. The court itself charges a fee, and the executor is entitled to be paid for his or her services. The estate will also be responsible for probate attorney fees, potential accountant fees, liquidation charges, and appraiser remuneration. All this can add up to a significant sum of money that comes directly out of the pockets of your loved ones. There are cases when the costs associated with probate can eat up 5% of the overall of an estate, and sometimes even more.
Probate is also a public proceeding, so there is no privacy afforded and this is something that matters to many individuals.
These are some of the reasons why people often employ strategies to avoid probate, and whether or not this approach is right for you is something that is best determined through a consultation with an experienced estate planning attorney.