Part one of two parts on Probate
You’ve probably heard of the term “Probate.” Probate relates to the settlement of an estate by means of a specific process in the courts. Many estates are settled in Probate, but not all of them by any means.
The most common Probates involve individuals who do not have a formal Estate Plan or Living Trust in place. Probate is put into practice in every state, although the procedures can vary. The intent of Probate is to offer a legal process for reviewing the estate, the payment of due taxes, payment to creditors, and the final disbursements of the estate’s assets.
So Probate is not necessarily a bad thing; again, the intent is protection. Certainly Probate has drawbacks such as the time to get through the courts (there are many steps), perhaps complexity, perhaps people who contest an inheritance, the cost of Probate, and other concerns.
If a couple is married and one spouse dies, assets are often transferred automatically to the surviving spouse outside of the courts, so no Probate process kicks in. However, if the surviving spouse then dies and he or she did not have any legal Estate Planning tools in place that would have kept the estate out of Probate, then the estate is settled in the courts.
Even if there’s a Will in place – or if there is no Will – and there is no other legally-binding estate planning in place, the estate goes to Probate.
However, Probate can be avoided.
Individuals and couples who want more control over how their estate is handled – and who want to avoid Probate – can do so by having an attorney create an Estate Plan. The Plan can include various tools, such as a Living Trust, which can ensure that the estate does not go to Probate.
You may think, “This may be a big expense” but careful planning for your estate and your heirs – even if you do not have a lot of assets – can actually save a lot of money in the long run, not to mention keeping your affairs private (since Probate matters are public record.)
So, while Probate is intended to protect an estate, even more protection – as well as significant savings in taxes and other benefits – comes with a proper Estate Plan.