Recently, I found myself in a difficult situation with my client and close friend, John. A few weeks ago, his mother passed away. Amidst his grief, he received additional stressful news—his mother’s estate plan was not properly prepared. Although she had left a Will, it was the only document in place.
Based on my experience in preparing my own estate plan, I was pretty sure a Will alone wouldn’t be enough to avoid probate. I had to break the unfortunate news to John, and sadly, I was right. His mother’s estate is now tied up in probate with no clear end in sight.
The estate includes cash, personal items, and real estate with significant equity, but it’s now all stuck in probate. If you’re unfamiliar, there are several reasons to avoid probate beyond the added frustration and stress.
Why You Want to Avoid Probate
- Time-Consuming: Probate can take months or even years, delaying the distribution of assets. The court needs time to validate the will, settle debts, and distribute assets, leading to potentially long waits for heirs.
- Costly: Probate comes with court, attorney, and executor fees, which can significantly reduce the estate’s value. These fees are paid from the estate itself, meaning heirs may inherit less. For example, setting up a trust might have cost John and his mother between $3,000-$5,000, but probate is now expected to cost around $34,000 in his case!
- Public Process: Probate is a public legal process, which means details about the estate, including asset values and distributions, become part of the public record. This lack of privacy can be uncomfortable for many families.
- Family Conflicts: Probate can lead to disputes among heirs, especially if the will is unclear or someone feels excluded. These disagreements often result in costly legal battles.
- Loss of Control: During probate, the court oversees the entire process, meaning the family has little control over how the estate is settled. This may result in outcomes that don’t align with the deceased’s wishes.
Alternatives to Probate
Fortunately, there are ways to totally avoid probate through proper planning. There is lots of detail behind each one of these strategies, but this list will at least get you thinking in the right direction. These alternatives are faster, more private, and less expensive:
- Living Trust (Revocable Trust)
- Joint Ownership with Right of Survivorship
- Transfer-on-Death (TOD) Accounts and Deeds
- Payable-on-Death (POD) Designations
- Gifting During Your Lifetime
- Small Estate Affidavit
- Community Property with Right of Survivorship (for married couples)
Part of what I do is help my clients get prepared… for life and for death. While estate planning may not be the most enjoyable conversation, it’s an essential one. Waiting until a loved one is aging or ill makes these discussions even harder. If you haven’t done so already, I highly recommend sitting down with your family to ensure everything is in order. You’ll need an estate planning attorney. If you’d like a referral to a trusted estate planning attorney, I’d be happy to provide one.
Take the time to have the conversation, prepare the documents, and put an estate plan in place. You’ll be grateful you did.
Feel free to reach out anytime to discuss estate planning strategies or any other real estate matters.
