Why You Might Want to Avoid Probate and How to Do It
Avoiding probate makes sense for most people
You've probably heard that probate is a long, expensive nightmare that should be avoided at all costs, or you might have heard that it really isn't that bad after all. In fact, both scenarios can be accurate. It often comes down to how complicated and extensive an estate is.
Some estates are so small they don't even require probate. Others are quite large, requiring deliberate and meticulous legal planning to avoid a probate snarl. In either case, you might want to arrange your estate to avoid probate for a few common reasons ranging from a cash crunch for your heirs to a total lack of privacy about your personal affairs.
Your Family Might Have No Immediate Access to Cash
It can take weeks or even months to access a deceased person's cash. Your heirs can be stuck footing the bill for everything from the funeral to your household utilities during that time if your estate must be probated. Your family probably won't be able to access the cash in your bank accounts during this time period.
They'll have to maintain property insurance, and pay taxes and possibly storage fees until probate is officially opened, and that can't happen without a court order. Your property and insurance policies must be maintained until the estate can take over.
If you have a spouse who doesn't work and doesn't have access to her own funds, she can be left scrambling to pay for even the most basic living expenses, like groceries.
A Probate Judge Can Get in the Way
Court approval is often required for every little step during the probate process, including running or selling the deceased person's business, repairing or selling real estate, or abandoning worthless assets, such as timeshares with high annual maintenance fees.
Numerous rules must be met, forms filed, and appraisals completed and submitted. You can avoid all this if your estate manages to bypass probate. Your family won't have to deal with a probate judge interfering in family financial matters.
Probate Can Cost a Lot of Money
Courts all over the country are prone to financial crises, and they often hunt for revenue when money gets tight. One way to raise funding is to increase court filing fees, including probate fees.
If your estate requires the assistance of an attorney, this individual must be paid, too. Many states base attorneys' fees on a percentage of the estate. Even a modest estate comprised of a home, a vehicle, and some bank or investment accounts can result in legal fees in the tens of thousands of dollars.
All these fees are payable out of your estate, sometimes from the sale of assets you intended to leave to your heirs. Probate can mean less money for them.
Probate Records Are Public Records
Probate is a state court proceeding, so all information about a deceased person's assets, liabilities, beneficiaries, and personal representatives are a matter of public record. Anyone at all can access your probate court file and find out just about anything he wants to know. All he has to do is ask for the entire file and it's unlikely that anyone at the clerk's office will care or ask why.
Worse, entire probate files are available for viewing online in some states. People don't even have to go to the courthouse to request a file.
Avoiding probate keeps your family matters and your financial information private.