Probate is something that older adults often discuss, and lawyers are often asked about ways to avoid probate. Probate is long and expensive, and it drags out the inheritance process for much longer than necessary, which is why so many people take steps to avoid proceedings. In case you’re in the process of estate planning, here are the three main reasons why people avoid probate, as well as some options you can use to evade proceedings.
Probate is a legal process that aims to disburse a person’s assets—such as money, vehicles, businesses, property, and other valuables—after death. However, before the wealth is distributed among the heirs according to the will, the court will also use the assets to pay any debts still owed by the deceased.
Like any court proceeding, probate can take a great deal of time to complete. With a large estate, it can take upwards of three years to complete the probate process. If the process is further complicated by certain factors, such as heirs contesting the will, probate can take even longer. For a smaller estate with no complications, probate can still take at least three to six months. On average, the probate process takes between one and three years.
There are a number of fees and costs associated with the probate process, and these can quickly add up. For starters, legal fees could run you a couple hundred dollars per hour, or a flat rate of a couple thousand dollars. The cost of probate is, on average, between three and seven percent of the estate’s value, but the court alone could take up to 10 percent. Other costs and fees associated with probate proceedings include:
Any time the probate process happens, wills, finances, and other documents become a matter of public record, which isn’t an appealing thought to most families. Not only do the assets, debts, and affairs of the deceased become public, but so too do the details of the wealth’s distribution, including the names of the heirs.
Luckily, there are a number of ways you can avoid probate, and there are plans you can make now to ensure your family doesn’t have to go through these lengthy and costly proceedings. The most common ways to avoid probate include:
Joint tenancy: One of the ways you can avoid probate is through joint tenancy, whereby multiple people co-own the same assets. When the first owner dies, that ownership stake is automatically transferred to the surviving co-owners. This can apply to property, vehicles, investments, and other assets.
Beneficiaries: It’s also important to ensure that you designate beneficiaries for all assets that allow them, such as retirement savings plans and life insurance policies. Upon your death, the beneficiaries will automatically receive the benefits.
Trusts: When you create a revocable trust, you can transfer your assets to the trust and name a trustee and beneficiaries. Upon your death, the beneficiaries inherit the assets contained in the trust without probate proceedings taking place.
The time and legal fees associated with planning to avoid probate are minimal in comparison to the cost of probate proceedings. When you combine that with the time it takes to complete probate and the fact that probate turns your private family affairs into a matter of public record, it’s no wonder that so many people make plans to avoid probate long before they expect to die.
Joint tenancy, beneficiaries, and trusts are all excellent ways to avoid probate, and while they each have their own pros and cons, you can use a combination of these methods to ensure that your heirs and loved ones get everything you want them to have, and promptly, upon your death.