Many attorneys throw the phrase “estate planning” around as if it is a generally understood concept, but many people do not have a clear idea of what it means. Put simply, estate planning means giving what I have, to whom I want, the way I want, when I want.
I often hear people say, “I just need a simple will.” In some cases that may be true. However, if you own a home or have minor children, a will is most likely not be the best option for your family. Although you can encapsulate your last wishes in a will, a will is required to go through probate. Probate is the process of transferring title to assets through the court system. One of the biggest advantages of designing a trust-based estate plan is probate avoidance.
It is rare to hear about a positive probate experience. Most of the stories you hear are rife with complaints about the costs and delays of probate. A trust is a loophole in probate law. By transferring title from your name to your trust’s name, the trust assets can pass to your descendants outside of the court system. The major advantages of avoiding probate are privacy, reduced costs, reduced delays, and certainty.
Through probate all the information provided to the court will be open to the public. Because we live in a digital world, creditors can easily search probate records and collect all or part of your heirs’ inheritance. An uncontested probate ranges from $2,000 to $3,000 while a contested probate can cost $5,000-$7,000. Probate can be a lengthy process lasting a year or two. The costs of probate are paid upfront while the estate funds and assets can only be accessed at the close of the probate action. This can place an unexpected burden on your Personal Representative who is responsible to cover the expenses. Although there is a level of certainty associated with creating a valid will, the judge still has discretion to interpret your desires and make modifications to your directions.
I have a client who has been dealing with the probate of his mother’s estate for nearly two years and there are still unresolved issues. I have another client who wanted to get his estate planning done because he saw how smoothly everything went with his grandparent’s trust. After his grandparents had both passed away, the entire estate was distributed to his parents, uncles, and aunts within three weeks without any disagreements. When the distribution of an estate happens quickly, heirs have less time to think about what “piece of the pie” they want and do not have time to “lawyer up” to get a bigger slice. I grew up hearing an ounce of prevention is worth a pound of cure. Let me help your descendants avoid family feuding and court involvement in setting up a trust-based estate plan!