You may have heard from friends, especially from those who have gone through it, Probate is a major headache and you should try to avoid it for your estate. Why is that, and is going through Probate really that bad? Read on to see if these potential landmines may be a cause for concern to you.
What is probate?
Probate is the legal court process to manage, account and distribute your assets and to pay all your liabilities in the state where you were domiciled at the time of your death. Your Last Will and Testament guides the court as to who gets what and who will be responsible for managing your estate. If you have no Will, then the court will determine who benefits or gets paid from your estate.
What’s the problem with Probate?
- It ties up property and accounts held in your name for a long time. It often takes several months for the Probate Court to appoint a Personal Representative (also called an Executor or Executrix in other states) to just get access to the deceased person’s bank accounts or transfer a car to another family member. During that time, you may get stuck paying bills like a mortgage, utilities, funeral expenses, property taxes and attorney fees to name just a few.
- Probate can be very costly. It is not uncommon for total costs for a probate to easily reach upwards of 5% to 10% of the estate’s total value. These costs could include court filing fees, attorney’s fees, appraisals, commissions, and fees paid to the Personal Representative for managing the estate through the probate courts. That means on a $500,000 estate, total probate costs could run $25,000 to $50,000 – money not going to your loved ones.
- Probate headaches increase if assets are located in another state. If the deceased person was domiciled in Massachusetts but owned a condo in, for example, Miami, this property must also be probated in Florida. This ancillary probate must be repeated in every other state where property is located, add even more delay, time and expense to the probate process.
- Probate is a very public process. Since probate is a state court proceeding, all information and filings are public record. That unfortunately means anyone can go into the Probate Court and see what assets your loved one had and who got it. Those nosey people could include your kid’s ex-spouses or an old unpaid credit card company looking to take your son or daughter’s inheritance. If you are looking to keep your financial affairs private, probate will not accomplish that wish.
- Probate can be very confusing if you try to do it on your own. Without help, navigating your way through the complex and arcane probate laws is difficult. If you don’t file a document or object within a certain time period, you could have unknowingly forever waived your rights. The Massachusetts Probate Courts cannot give out legal advice so you are often left on your own to figure out how to probate your loved one’s estate or must retain an attorney to do it for you.
Should everyone try to avoid Probate?
Not necessarily. Sometimes you may want the finality that the Probate Court can provide. If you are concerned with potential creditors making claims against your estate, probate may be advantageous. In Massachusetts, a creditor must file any claim it may have against an estate within a year from date of death or be forever barred from making that claim. That finality also applies to heirs or contentious family members for having a binding court order in resolving your estate.
Mourning the loss of loved one is difficult enough. Couple that with the time, expense, complexity, and emotions having to go through the probate courts is not the type of legacy we want like to leave our loved ones. A knowledgeable estate planning attorney, in reviewing your circumstances, should be able to help walk you through theses tradeoffs and answer the question whether avoiding probate is right for you.