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PROBATE: What is it? Why do I want to avoid it?

July 12, 2016

First a quick definition of what probate is.  The word probate comes from the Latin word "probare" which meant "to try, to test or to prove" something.  

 

The probate court is a place where the validity of a "Will" can be "proven" or "challenged". Wills are not binding documents and can be challenged by anyone in probate court.  

 

Now, not all Wills are contested or challenged, but many are and all are subject to being challenged.  Two main areas where most Wills are challenged are, the instruction written in the Will may not represent the intentions of the testator at their passing. They may have changed their wishes, but did not get around to change the "Last Will".  Another reason "Wills" are challenged is because there is some concern that the testator was either mentally deficient, under duress or there was coercion when they signed the Will.  Another sad reasons Wills are contested is because "they can be" and some family members or complete stranger may challenge a Will in probate court to cause mischief so that the other heirs will "pay them off" to get rid of them and settle their "claim". You and I would call that extortion, unfortunately the state probate system calls that an "out of court" settlement.

 

Because Wills are written and rewritten multiple times in one's lifetime, there are often multiple versions of one's last wishes.  

 

All Wills say "Last Will & Testament"  the first one you write says "last will" and the last one you write says "last will" so there can be multiple "last wills" when someone dies, but the "real" last (dated) Will is the only one that counts. All previous Wills and codicils are normally rendered null and void when a new Will is created.  The new Will supersedes the old one.

 

This can be the cause for concern.  John remembers seeing a copy of dad's Will giving him the beach condo, but when his dad dies John discovers a new Will giving the beach condo the dad's second wife. This creates suspicion and John is left to wonder ??? "Dad never mentioned that he was giving the beach condo to his wife??????.  I think she may have talked him into it or coerced him to give it to her."

 

Sometimes a Will designates assets to go to people who are no longer living. This sometimes creates a fight for who is the next eligible beneficiary.  So you may hear, "Well mom would have wanted me to have that" or "Steven's share should be split between us, we are, after all his siblings."  But Steven's wife believe she is entitled to her husbands share as do Steven's adult children. Who decides? The probate judge will try to determine who is eligible.  NOT YOU, but the courts.

 

One of the fantastic benefits of having a Revocable Living Trust is that when your trust is properly funded, there is no need for probate, and the trust instructions are not contestable like they are in a "Last Will". Your Revocable Living Trust is "revocable" meaning "changeable"while you are are alive, however when you pass away the instructions become "irrevocable". This basically says to your beneficiaries "if you don't like what is written here, too bad, this is what you get" the instructions are not contestable or changeable anymore.

 

Probate is a lengthy, costly and public process:

 

Even if there is no challenge to a Will, there are many reasons you don't want your family to go through the probate process.

 

TIME: On average most families spend 9 months to 2 years in probate.  I have spoken to many people over the years who have spent 3, 4 and 5 years in probate, even longer. Those are the exceptions and not the rule, but even on the short end probate is usually not a quick process. A year to 18 months is common.

 

COST: Probate is expensive.  Attorney fees, court fees, filing fees. it all adds up. According to surveys, current estimates AARP says most probates eat up between 8 - 10% of the gross value of your estate (before debts are paid).  These costs must be paid prior to the estate being distributed to the heirs.  Also, if you own property in multiple states, there will be a probate is those states as well as a probate in your home state.

 

PUBLIC: Probate files are open to the public, so anyone can have access to see what you owned and who you owed. This also invites "unhappy heirs" to contest your Will and exposes your family to unscrupulous solicitors.

 

One last thing:  If you die without a "Will" you still get one, the state will write a Will for your family after you pass.  This is called dying INTESTATE, it is the worst scenario for many families.  The state is unaware that you already gave an inheritance to Kathy, or that Barbara never paid back the loans or that Bobby hasn't spoken to dad in decades. But the family know those things and the fighting begins, so as bad as probate is, it is usually worse when you have left no instructions. 

 

Avoiding probate for your family is one of the nicest things you can do for them. A Revocable Living Trust is by far the best way to keep your family out of the probate mess.  Your Successor trustee (executor) will distribute your estate according the the instruction spelled out in your trust, no need for the heirs to get court approval. There may be other ways to avoid probate, but they have their own problems.  See the dangers of "joint tenancy" in my other blog post. 

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