Why You Might Want to Avoid Probate and How to Do It

Avoiding probate makes sense for most people

Depending on who you talk to, you might have heard that probate really isn't all that bad and that it doesn't cost that much or take too long. Or you might have heard that it's a long, protracted, expensive nightmare that should be avoided at all costs.

It all 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 and deliberate and meticulous legal planning is required to avoid the probate snarl. 

But what if you just have an average estate? You might still want to arrange your estate to avoid probate. Here are the top reasons why.

Your Family Might Have No Immediate Access to Cash

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Yes, it's true. It can take weeks or even months to gain access to a deceased person's cash, and your heirs will be stuck footing the bill for everything from the funeral to your household utilities during that time. They'll have to maintain property insurance, and pay taxes and possibly storage fees until probate is officially opened and your estate can pay its own bills. Your property and insurance policies must be maintained until that time. 

Your family probably won't be able to access the cash in your bank accounts during this time period. If you have a spouse who doesn't work and doesn't have her own funds, this can leave her scrambling to pay for the most basic living expenses like groceries.  

Avoiding probate can allow family members to have immediate access cash to pay bills, but it has to be done properly. Some legal mechanism must be in place to transfer the account to someone else without probate. Consider naming your spouse or another family member on the account. Talk to an estate planning attorney about how best to do this because laws can vary by state. 

A Probate Judge Can Get in the Way

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Court approval is often required for every little thing during probate, including running or selling the deceased person's business, repairing or selling real estate, or abandoning worthless assets—think timeshares with high annual maintenance fees. Avoiding probate means your family won't have to deal with interference in family and financial matters by a probate judge.

Probate Can Cost a Lot of Money

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Courts all across the country are prone to financial crises and they hunt for funding when money gets tight. One way to raise revenues is to increase court filing fees.

This was debated in Florida when it was proposed that filing fees should be increased to as much as $5,000 just to open up a probate estate. Thankfully, they were ultimately only raised from $285 to $400.

Avoiding probate means avoiding these court fees, and court fees are payable out of your estate and sometimes from the sale of assets you leave to your heirs. So probate means less money for them and more for the state. 

Probate Records Are Public Records

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Probate is a state court proceeding and this means that all the information about a deceased person's assets, liabilities, beneficiaries, and personal representatives are 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.

Wait, it gets worse. In some states, entire probate files are available for viewing online. 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.

How to Avoid Probate

Avoiding probate is all about how you title your property and assets. A deceased person cannot legally own property. Probate is only necessary when ownership of an item has no other legal means by which to pass to a living beneficiary. Speak to an estate planning attorney about how to title your property so probate isn't necessary for ownership to move to your chosen beneficiary. This might include forming a living trust to hold ownership of your assets or the type of deed you hold on your house.