Probate is a legal process that will enter the picture when assets are being transferred through the terms of a will. It takes place under the supervision of a court, and an intestate estate would also be subject to probate.
There are some things that you should know about the procedure before you make any final estate planning decisions, we will look at them here.
Loss of Privacy
Do you want anyone that is interested to know how you decided to transfer your estate? If you use a will as your asset transfer vehicle, the records are available to the general public, so this information would be readily accessible.
Generally speaking, no one wants to advertise their financial decisions, but there is another element here. Someone that is close to you may not be happy with the way the assets were distributed, and this can cause hard feelings among family members and others.
There are a number of different expenses that accumulate during probate. These would include court costs, the executor’s remuneration, accounting and legal fees, appraisal charges, and liquidation expenses.
When you add in final taxes and incidental costs, a noticeable portion of an estate can evaporate during probate. Experts have estimated that between three and seven percent of an estate will typically be consumed by probate costs.
People that are going to be inheriting assets will be forced to wait out the probate process before they can receive their inheritances. The exact duration will depend on the jurisdiction and the relative complexity of the case, but you are usually looking at eight or nine months at minimum.
Probate Can Be Avoided
If these factors do not sound very appealing, there is light at the end of the tunnel. When you are planning your estate, you can proactively take steps to avoid probate.
The revocable living trust is a very versatile and effective asset transfer vehicle that can be the right choice for a wide range of people. When you establish a living trust, you are called the grantor of the trust, and the trustee is the administrator.
As the grantor, you can also act as the trustee while you are alive and well, so you maintain complete control of the assets in the trust. You name a successor to step into the role after your death, and they could also be empowered to act on your behalf in the event of your incapacity.
After your passing, the successor trustee would distribute assets to the beneficiaries, and the probate court would not be involved. This is one benefit, but there are others that we will describe in a future blog post.
There are some types of transfers are simply not subject to probate even if you are not trying to avoid it. When an individual retirement account is being handed down, the probate process is not necessary, and this also applies to the distribution of life insurance proceeds.
If you own property, you can add a co-owner to the title or deed. This is called the condition of joint tenancy, and it comes with right of survivorship.
After the death of one joint tenant, the surviving tenant or tenants would assume ownership of the deceased partner’s ownership interest. This would be a probate-free transfer.
When you open an account at a bank or a brokerage, you can add a beneficiary. This is called a payable on death account or Totten trust. After your passing, the beneficiary would present the death certificate, and they would assume ownership of the resources.
Schedule a Consultation Today!
As you can see, there are some things to think about that a layperson may not fully understand. When you choose our firm, we will gain an understanding of your situation, answer your questions, and make recommendations so you can act in a fully informed manner.
Ultimately, you will go forward with a custom crafted plan that ideally suits your needs.
If you are ready to get started, you can schedule a consultation appointment at our Troy, Michigan estate planning office if you call us at 248-251-1001. There is also a contact form on this site you can use to send us a message.