The Pros and Cons of Probate
When friends and family learn someone is thinking about an estate plan, it is not uncommon to hear a lot of conflicting advice. Some people will say an estate plan is unnecessary and not worth the expense. Others will argue in favor of either setting up a trust or just sticking with a will. After hearing all this conflicting information, becoming overwhelmed and confused is common, which is why working with an experienced estate planning attorney is important to picking the right arrangement. One popular thought about estate planning is the need to avoid probate (court procedure for distributing property after death) at all costs, and put everything into trusts or other accounts that bypass the probate process. However, before completely rejecting probate out of hand, it is worth exploring the pros and cons of this process.
Understanding the good and bad points of probate may allow someone putting together an estate plan to enter the process with more of an open mind, which will make for a more productive meeting with an estate planning attorney. Seniors, in particular, due to the issues associated with this life stage, are apt to have different needs and available legal options, and will especially benefit from the advice of an experienced estate planning attorney.
Advantages of Probate
The first preliminary point to understand about the probate process, before launching into its good and less desirable points, is that this procedure is automatic unless a person does something affirmative to avoid it. Probate specifically accomplishes the following under the supervision of a judge:
- validates a will, if one exists;
- determines legal heirs;
- collects and values assets;
- pays creditors; and
- distributes any remaining assets to heirs.
If someone does not have a will, or has a small estate to distribute, court supervision is an effective way to ensure the proper individuals receive a person’s assets. Further, a simplified process is available for small estates that expedite probate so it becomes less of the onerous procedure most people envision probate to be.
Importantly, going through probate creates a barrier for creditors who try to come after the heirs long after an estate is settled. Probate gives creditors a certain period of time to file a claim for payment of a debt, and failure to make a claim within this period bars the creditor from trying to do so in the future, absent a few exceptions that are outside the scope of this discussion. Thus, when an heir takes possession of an asset following probate, he/she can be much more secure that no creditors will come knocking a year later asking for payment.
Disadvantages of Probate
One of the largest disadvantages of probate, and the one most touted as a reason to avoid the process, is the time and expense involved. There are court costs, attorney fees and personal representative expenses that will have to be paid, which does not take into account any additional costs if someone challenges a will or another person’s right to a share of an estate. Then there is the time involved. In the vast majority of cases, the probate process will be completed within a year, but in more complex situations, it may take several years to complete, usually in situations where there are complex assets to liquidate, estate taxes to be paid, or litigation. Further, probate ties up assets, leaving family members to cover expenses until the assets are released, which is a considerable burden if other sources of liquid funds are not readily available. Finally, probate is a public process, and puts some details of a person’s estate into the public record.
Given what is at stake, an experienced estate planning attorney is the best source for knowing if probate is beneficial, and one should be consulted in lieu of do-it-yourself form documents that leave many key matters unaddressed.
Get Legal Advice
Putting together an estate plan is one of the most important decisions you will ever make, and you want to ensure the plan you execute will in fact produce your desired outcome. Estate planning is a complicated area, and William Rambaum, P.A. specializes in helping seniors with probate and estate planning issues. If you live in the Oldsmar or Clearwater area, contact the office to schedule an appointment.