Probate: How to Avoid It

Many people have been told that it is important for people to “avoid probate.” However, they might not know exactly what probate means, why it can be a problem or how to successfully avoid it. This article discusses probate, why it’s a problem, and how to best avoid it.

What is Probate?

Probate means “to prove” a will. It covers the entire legal process necessary to settle a person’s estate after they die. The person named in the will (usually a family member) is known as the executor or personal representative. The executor opens the probate case in court. With the court’s help, the executor will work through all of the financial business that the decedent left behind. For example, the executor may distribute the decedent’s personal property, money, real property or anything else that the deceased owned at the time of his or her death. The executor must also deal with any debts that were in existence at the time of death.

Why is Probate Such a Negative Thing?

Probate is not inherently bad. Probate’s goal is to oversee how property is distributed after someone passes away. However, people generally should avoid probate, particularly in California. Here is why:

Privacy Concerns

The executor will file the will with the probate court to start the probate case. Therefore, the will and most things related to the will become part of the public record. If for any reason a person wants to maintain a sense of privacy after they die, it could be a good idea to avoid probating the estate in court. Famous people or other potentially controversial people usually don’t want their financial and family affairs dragged out into the open.

Probate Can Create Family Disagreements

Any person interested in the deceased person’s estate can make own claim on the estate. This is one of the reasons that wills are probated in a public court case. For people with complicated family dynamics, unpopular second marriages or estranged loved ones, avoiding probate should be a top priority. When an estate is handled through non-probate channels, it becomes much less likely that a will may be successfully challenged.

Probate is Slow

Like most things that end up in court, probate can be time-consuming. In more complex estates, the entire process can last months or years. And, while the family waits for this time to pass, the decedent’s assets or property may be slowly losing value or be lost completely. 

Probate is Costly

Probating an estate requires the help of a probate lawyer to facilitate the matter. Here in California, the probate rules state that the probate lawyer is paid as a percentage of the gross estate value. That means the probate lawyer is paid a percentage of the fair market value of the probate assets, without subtracting any of the debts associated with those assets. With proper pre-planning, much or all of this cost may be avoided.

How Can Families Prevent the Need for Probate?

Creating a smart estate plan is the best way to avoid probate. You and your attorney can work together to draft the proper legal documents and carefully time asset transfers

Revocable Living Trust

The revocable living trust is an document which dictates the management or distribution of property. The people who establish the trust transfer ownership of their property to the trust. The property owner also chooses someone to act as trustee, a trusted person who will manage the trust property and make distributions after the death of the trust’s creator.

The other good thing about a trust is that there is no need to involve the court in any way. The successor trustee does not have to file the trust with the probate court to administer the estate. Instead, the successor trustee can simply administer the estate in private. 

Joint Title

Another way to avoid probate hassles is by placing your assets into joint ownership with your future beneficiaries. This way, when you pass away, the ownership interest will automatically transfer to the joint owner. There are some problems with joint title, however. First, it may lead to unintended consequences, if one of the beneficiaries receives all the property to the exclusion of the others. Second, a joint tenant may have personal financial issues, which may impact the jointly held property. You can protect your property with careful planning. 

Payable-On-Death and Transfer-On-Death

Payments on death accounts (POD) have a designation which names a person who will receive the assets in the account when the original account owner dies. At the same time, transfer on death (TOD) is a designation on the title or deed to a piece of real estate or a car which will automatically change ownership once the owner dies.

Don’t Give Away Your Assets

Some people assume that the easiest way to avoid probate is to give everything away before you die. However, doing this could cause problems for seniors when they may need to qualify for assistance for long-term care.

Hopefully, these tips will help you and your family plan responsibly for the future. Contact us if you would like to learn more about any of these strategies, or to discuss your estate plan. 

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Davis, CA 95616

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Sacramento, CA 95825

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Roseville, CA 95616

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Monterey, CA 93940

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San Antonio, TX 78258

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