Estate planning is about far more than directing inheritance to heirs and minimizing taxes. For individuals who do not take proactive measures, loved ones may end up enduring a process known as probate.
Probate is the court-supervised process of transferring a decedent’s assets from the estate to the proper person. While this might sound relatively simple, in reality, it is often a significant undertaking. Here are three key reasons you may want to consider creating an estate plan that minimizes exposure to the probate court.
1. Probate can take a very long time
Probate is not a one-off event. Rather, it is a collection of different steps an estate must go through, often involving a deceased individual’s loved one’s. This includes:
- Verifying the validity of a will
- Appointing an executor or administrator
- Determining heirs and beneficiaries
- Inventorying assets
- Paying creditors and probate bills
- Distributing assets
Even the California courts admit this requires a real time commitment. For a lot of people, probate will eat up nine to 18 months of their time. However, for contested or complex estates, probate can stretch on far longer.
2. Probate can be expensive
Probate is not free. There are a number of potential costs to consider:
- Court filing fees
- Certified copies
- Accounting fees
- Appraisal costs
- Executor’s fees
Some estates may also need to consider a surety bond, which can add to the expenses. All told, expect at least 4-7% of an estate’s value to be siphoned away in the form of fees and other costs. If litigation is required, that figure will likely go up.
3. It’s time-consuming and stressful
The bulk of the probate burden is shouldered not by court employees, but by loved ones and family members. They are often required to be closely involved in the process – a responsibility that can amount to a full-time job for long stretches of time. This can lead to added stress and the potential for internal family conflict.
Keeping your assets out of probate is often possible. However, it is something that must be planned for and spelled out ahead of time. By combining a well-written will with other legal tools, such as appropriate trusts, you can help ensure family members remain relatively unimpacted by the probate court.