Understanding the Probate Process

Simply put, probate is a court process through which a decedent’s assets are identified, any debts, taxes or expenses paid, and, finally, the inheritance is either distributed outright to loved ones or is administered and distributed to them through a trust.

Identify, Gather & Manage

Since organization and recordkeeping are the dynamic duo when it comes to a successful probate, most probate problems can be mitigated, if not avoided completely, by minding the basics. Many families have found helpful tools to simplify this task. For example, hard copy and digital organizational tools that are easy to use and comprehensive may be found on the Internet. Whatever tool one chooses to use, the only one that will work is the one you will use … and maintain.

Settle Financial Matters

Rarely does anyone leave this life without a few financial matters to resolve. Whether the roofer, the IRS or the funeral home, chances are good your estate will have some financial liabilities to pay on your behalf. Except for “known” creditors, all states provide for an outside time limit for unsecured creditors to make a claim against the estate. This provides protection for estate beneficiaries after the probate is closed.

Inheritance Distributions

When using a will, there are three basic approaches to inheritance distributions at the close of the probate process.

  • Outright: As soon as the probate steps are completed, the inheritance is distributed without any “strings” attached.
  • Staggered: Outright distributions are made at certain beneficiary ages or triggering events (e.g., one-half at age 25 with the balance at age 30).
  • Long-Term Discretionary: Distributions are made to or for the benefit of beneficiaries in the judgment of the trustee, offering the greatest protection from squandering, divorces, lawsuits or bankruptcies.

Probate Perspectives

Probate is not the same in every state. Therefore, given the mobile nature of our society, you should have your estate plan reviewed and perhaps revised if you relocate. For instance, in some states the probate process is simple and streamlined; while in others it can be more complex and cumbersome.

Significantly, too, some states provide minimum statutory fees to the attorney and estate fiduciary based on the value of the assets subject to probate. Other states require the attorney and estate fiduciary to track their actual time and the probate judge ultimately approves, disapproves or revises the fees based on whether they are reasonable.

Not surprisingly, in those states where probate is more complex, cumbersome and expensive, many estate planning attorneys advise clients to avoid probate. Common probate avoidance approaches include funded revocable living trusts, transfer on death designations and beneficiary designations for life insurance and retirement funds.

Ultimately, an estate planning attorney can advise you regarding the benefits and detriments of probate planning or probate avoidance planning.

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