“Each person must understand their own financial and family situation to determine the best estate planning approach for them.”
Let’s be clear—there is no one-size-fits-all estate plan or trust that will work for every family. Here’s one that you don’t read all that often—probate is not always a bad thing, according to the Rushville Republican’s article “Probing Into Probate.”
The first thing people think about when they hear the word probate is cost. There are costs associated with probate including court fees, personal representative fees, attorney fees and accounting fees. However, there are also fees associated with creating revocable trusts and trustee fees for administering trusts. The question should be, do you want to pay those fees now or pay them later?
Time is another reason why people don’t want assets going through probate. While that’s understandable, probate serves an important purpose. During the six to 12 months that it takes for the average estate to go through the process, creditors have a limited amount of time during which they can file any claim against the estate. If no probate estate is created because trusts were created, it’s possible that assets could be distributed. However, a creditor could then make a claim within the legal time period. What would happen? If the court deems the claim to be valid, the beneficiaries may have to return some of the assets they received under the trust or the trustee could be responsible for paying the claim.
Privacy is a key component of avoiding probate. If there’s anything you don’t want the public to know about your assets and how they are being distributed or your last wishes, then you do want to structure your estate plan to put all possible assets into vehicles that do not go through probate.
Emotions can run high in families, while estates are being settled. Not everyone will agree with how the estate is being handled. That can lead to fractures and estrangements. In some cases, families do better, when a judge is making the hard decisions, so they don’t have to fight among themselves.
Most people don’t pay federal estate taxes now that the exemption is roughly $11.2 million per person. However, your state may have an inheritance tax, estate tax or both.
Whether it’s a good thing to have your estate go through the probate process is a very individual decision. If you are in your 50s or older, in poor health or have a significant amount of assets, you may want to do some probate avoidance planning. An experienced estate planning attorney can help create a plan that will keep your life private, plan for your assets to be distributed according to your wishes and hopefully, keep your family members at peace with each other.
Reference: Rushville Republican (Aug. 28, 2018) “Probing Into Probate”
Suggested Key Terms: Probate, Estate Tax, Privacy, Assets, Creditors