If you use a Will to facilitate the distribution of your estate, the executor who you name in the document would act as the administrator. The executor would be required to admit the will to probate, and the court would supervise while the estate is being administered.
During probate, the assets are identified and inventoried by the executor, and they are prepared for distribution. The court will determine the validity of the will, and creditors will be notified and paid by the executor.
After all the tasks have been completed to the court’s satisfaction, the estate will be closed, and the inheritors will receive their bequests.
All of this sounds innocent enough, but there are some things you should know about probate before you decide to use a will, and we will look at them in this post.
1) Probate Expenses Add Up
Probate is not free by any stretch of the imagination. The executor is entitled to remuneration for their time and effort, and the court charges a fee. In many cases, the executor will engage a probate lawyer to provide assistance. An accountant may be brought in as well.
There can be appraisal and liquidation charges along with incidental expenses that are incurred by the executor along the way. In all, probate expenses will usually consume somewhere between three and seven percent of the estate before it is distributed to the heirs.
2) Probate Is Time Consuming
You would naturally want your loved ones to receive their inheritances in a timely manner after your passing, but this won’t happen if your estate is subject to the probate process.
It can take close to a year, even if the situation is not particularly complicated. No bequests can be distributed while the estate is being probated by the court, so the inheritors have to play an extended waiting game.
3) Probate is Public
Do you want anyone and everyone to be able to know exactly how much money you had and who received it after you passed away? There are very few people who would say, “Yes”. There is no privacy when your home and assets go through probate.
The records are available to the general public, so the information is readily available. This loss of privacy is disturbing in a general sense, and certain details could cause hard feelings among interested parties.
4) Probate Can Be Avoided
If you are not too enthused after reading the first three facts, don’t worry, there is a solution: you can proactively implement a probate avoidance strategy when you are getting your affairs in order.
A revocable living trust is a very effective estate planning tool that is ideal for a wide range of people. If you create this type of trust, you don’t have to worry about losing control of the assets, because you would be the trustee while you are alive.
You would be able to change the terms at any time, and you could convey additional property into the trust after it has been created. In your trust, you name a successor trustee to assume the role after your passing, and your heirs would be the beneficiaries.
You could also include a spendthrift clause in order to protect the principal from the beneficiary’s creditors. You would be able to instruct the trustee to distribute limited assets over an extended period of time if you want to add another layer of protection.
The distributions to the beneficiaries would not be subject to probate, so the downsides that we explained at the beginning of this article would never enter the picture. It is cost-effective to create a living trust, so it is an investment that will yield dividends.
Access Our Free Worksheet!
We have many resources on this site that you can tap into free of charge, and one of them is our estate planning worksheet. It has been carefully prepared to help you gain a more thorough understanding of the process, so you can learn a lot if you take the time to go through it.
To get your copy, visit our worksheet access page and follow the simple instructions.