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The Perils of Probate

Probate, in no uncertain terms, is something every estate owner wants to avoid at any cost.

Yet most of us are not sure why. Unless you've been the executor for someone else's estate, it's a process you won't have to go through... but your loved ones might have to.

Probate is a legal process where your named executor goes before a court and does several things:

  • Identifies and catalogs all of your property

  • Appraises the property, and pays all debts and taxes

  • Proves that your will is valid and legal, and

  • Distributes the property to your heirs as the will instructs.

 

 


Costly and Time-Consuming

Probate is not cheap or quick. Because probate requires a hearing in over-burdened courts, the process can tie up your property for a year or more. That means your loved ones will not get the property you intended for them until the probate process is complete.

In addition, probate is very expensive. Probate is usually handled by estate attorneys, who sometimes charge a flat percentage or a high hourly rate. Their fees and court costs can eat up 2-4% of your estate's value.

 

 

Not the Kind of Publicity You Want

The courts, by their very nature, do not afford privacy. Everything that comes before a judge is public record, as is true with your estate. A will is a very personal document, and may reveal private family and financial issues and concerns. But once it is entered into the court record, it becomes public, and can be inspected by anyone.

 


The Lawyers, Not Your Family, Are the Winners

Many lawyers don't explain fully the probate process when preparing your will, because probate usually represents a nice profit for them with little effort. To do probate, attorneys often charge as much as permitted by law, but most of the probate work is actually clerical and can be accomplished by paralegals and clerks.

On a $500,000 estate, probate attorney fees could easily reach $20,000, not including court costs and other expenses. And unfortunately, you're no longer around to do anything about it.

 


Is Your Estate Liquid?

Because probate costs can add up quickly, even before a single distribution to heirs is made, the estate must pay for these costs. However, if your estate consists of many illiquid assets, such as real property, art, coins, or long-term bonds, these assets will have to be sold to pay for probate.

Selling these types of items involves appraisal fees and additional delays, not to mention the fact that property you may have intended for children may be sold at below-market value to pay for probate.

 


Multiple Probates

Believe it or not, some estates must go through more than one probate proceeding. Probate typically takes place in the city or county where the decedent lived. However, if the decedent owned property in another state, that state may also require a separate probate proceeding.

Any additional probate will be bound by that state's probate laws. It is at this point that attorney fees and court costs begin skyrocketing.

 


Avoid Probate Altogether

Certain states have a threshold an estate's value must cross before going into probate. For instance, a state may allow you to pass up to $100,000 of property without going through probate. These thresholds vary by state to state.

Living trusts allow you to avoid probate completely. When you set up a living trust, the trust is considered separate and apart from you. If you fund a trust, the trust (not you) owns your property. Therefore, the trust can continue even when you pass way.

The probate courts have no jurisdiction over property owned by a living trust.After your death, property in the trust can be distributed -- privately and easily -- to family or friends with no probate.

Another option is to name your heirs as beneficiaries on certain retirement accounts, life insurance and annuities. When you name a beneficiary on these types of accounts, the proceeds from the account are distributed on the owner's death immediately to the named individual(s). Again, the courts have no jurisdiction over these types of distributions.

 


Avoid Probate by Gifting

Another way to reduce or eliminate probate is by simply giving your money away. Under current tax law, Uncle Sam allows you to give away up to $13,000 per individual each year. That means that a couple can give up to $26,000 per year to each child, grandchild, niece, nephew or friend. Lifetime gifting reduces your taxable estate, and may place your estate under the probate threshold for your particular state.

 

Order a FREE Special Report on Probate Today!

In no uncertain terms, probate can be an ugly process. To reduce or eliminate probate, our probate experts can help you review your options and give you access to affiliated attorneys.

To receive a FREE Special Report on probate and strategies that avoid it, click here.

 

 

 


Why Plan Your Estate?
Introduction to Wills
Living Trusts
The Perils of Probate
Durable and Medical Power of Attorney
Taxes, taxes, taxes!
Creating a Second Estate
Dynasty Trusts
The Legacy Trust
Family Limited Partnerships (FLiPs)
Charitable Trusts
Building on a Solid Foundation
Funding Your Estate Plan
Choosing a Qualified Attorney
How You Can Plan for Your Own Estate

 

 

 

 

 

 

 

 

 

 

 

 


8 Ways to Avoid Probate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Useful Guides to Probate In:
California
Colorado
Florida
Georgia
Hawaii
Illinois
Indiana
Maine
Massachusetts
Mississippi
Ohio
Pennsylvania
Texas
Virginia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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