14 Nov Top 4 Reasons To Avoid Probate
Many people have been told to avoid probate. But what exactly does that mean? And how do you keep your heirs from having to go through probate?
Probate is a legal process for transferring assets to the heirs. According to LegalZoom, probate costs American families about $2 billion a year (more than $1 billion of which goes to attorney’s fees). Appraiser’s fees, attorney’s fees, and court costs can eat up to 5% of a decedent’s assets. That’s why you should avoid probate. Here are top 4 reasons to avoid probate:
Probate Is Slow
Probate is time-consuming. The average probate case takes about three to six months to resolve. During this time your heirs will have to foot the bill for taxes, fees, and other expenses until probate is completed. Avoiding probate allows your loved ones to have immediate access to cash and most importantly move on with their lives.
Probate Is Expensive
One of the biggest reasons why people avoid probate is that it’s expensive. A probate attorney charges fees for paperwork and court appearances. The estate executor is also entitled to a fee (though the fee is usually waived if the executor is a family member or a close friend).
Many courts across the United States are hurting for funding. The budget cuts have prompted courts to increase filing fees in order to stay open. For example, in Florida, the probate fees for a regular estate were raised from $280 to $400. In some states, probate fees can be as high as 10% of the asset’s value depending on the size of the estate. Estate taxes and legal fees can be reduced or eliminated if probate is avoided.
Probate Records Are Made Public
Probate is handled by the state court system, which means that the information shared during probate is entered into public record. When an executor files your will in probate court, it becomes a public document and opens to public review. A Criminal can use this information to commit fraud.
Probate also allows the judge to have the final say on what your heirs get and how your estate is distributed.
Judge May Get In The Way
During probate court approval is often required to do many things. For example, a judge’s approval is needed to sell a decedent’s business, sell or repair real estate or to dispose of worthless assets. You can avoid judge’s interference in your family matters by avoiding probate.
If your will goes through probate, your heirs, as well as other relatives who would inherit from you will have the opportunity to contest the will. Heirs who are not pleased with what you have assigned them can contest the will, which can lead to family feuds, create delays and rack up legal fees. Takeaway: If you want privacy, avoid probate.
How To Avoid Probate
There are many ways to avoid probate but advance planning is required. For example, the jointly owned real estate passes automatically to your beneficiaries without probate. You can also set up bank accounts to be transferred to your heirs upon your passing. Life insurance proceeds usually don’t go through probate.
Another way to avoid probate is to create a trust. A trust can pass your assets to your heirs without probate. Setting up a trust is one the best ways to avoid the hassle of probate, there’s no fee, no delays and your financial information is kept strictly confidential.
Have questions? Confused? Need more clarity regarding probate? No problem. Reach out to us via telephone, email or through the website and a valued member of the firm will answer all of your questions. Additionally, visit our Events page if you are interested in attending one of our estate planning or retirement workshops – where we help people find solutions for their estate planning situations and retirement goals.