What is Probate and How Can it be Avoided?

Estate Planning is the process of legally structuring the future disposition of current and projected assets (Forbes) and is an important part of End-of-Life planning. Unfortunately, when Estate Planning isn’t put in place prior to a parent’s passing, their adult children can find themselves unprepared and unexpectedly thrown into the Probate process, which can be time consuming, expensive, and very stressful. Given that this process is optional, you should consider creating an estate plan while your parent is living so you can bypass the probate process.

What is Probate?

Probate is the legal process that local governments use to ensure that assets properly pass through a deceased person’s estate. In other words, the court ensures that the decedent’s debts are paid off and that any remaining assets are given to the correct beneficiaries. On the plus-side, probate does provides accountability and transparency to the estate administration process. However, that benefit comes with material costs such as court-related taxes and fees and professional accounting and legal expenses.

When is Probate Required?

There is a common misconception that probate is only required if a decedent died without a Last Will and Testament, and that by creating a Will and ensuring that assets pass through the Will upon death, the probate process will be avoided. Unfortunately, the opposite is true. Sending the assets through a Will is what requires probate. Anytime assets pass through a decedent’s Will (whether the decedent created the Will himself or herself, or the Will is supplied by state statutory law, because he or she did not create a Will) probate is required in order to permit the court to supervise the process and to protect the interests of estate’s creditors and beneficiaries.

What Are the Disadvantages of Probate?

The following are disadvantages of Probate:

  • Probate is time-consuming and expensive.
  • The executor of the estate (either named in the Will or determined by a process established pursuant to state law) must file paperwork with the court on a regular basis throughout the probate process.
  • It is not uncommon for probate to last a year or two – or longer – to be completed. In addition, the following costs are commonly incurred during the probate process:
    • Probate taxes – this varies by jurisdiction but is generally calculated based on the value of all probate assets.
    • Court costs and filing fees
    • Legal fees– many people choose to use an attorney to guide them through the probate process.

How Can Probate be Avoided?

Because probate only applies to assets passing through a deceased person’s sole name through his or her estate, it can be avoided by ensuring that every asset is controlled by one of the following distribution alternatives:

  • Joint ownership with rights of survivorship – any asset owned jointly with rights of survivorship automatically passes to the surviving joint owner(s) following an owner’s death.
  • Beneficiary designation– any asset that has a valid beneficiary designation (e.g., life insurance or retirement accounts) is payable to the named beneficiary(ies) .
  • Revocable trust – any asset owned by (or payable by beneficiary designation to) a revocable trust is distributed pursuant to the terms of the trust.

Each of these tools has a different subset of pros and cons, so it is important to consult with an attorney to fully understand which works best to accomplish your goals.

Do I Still Need a Will?

Even if you intend to avoid probate by using joint ownership, beneficiary designations and/or a revocable trust, it is still important to have a Will to act as a safety net to catch any assets that may have been overlooked. In addition, a Will is also important for individuals with minor children, as the Will is where guardians for those children are appointed.

In order to streamline the time and expense associated with the distribution of assets following death, consult with a legal advisor to evaluate whether your estate plan should be constructed in a manner that avoids the probate process.

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Dan Vaughan, Esq., is a Principal with Vaughan, Fincher & Sotelo, a firm dedicated to providing comprehensive estate planning solutions to individuals, couples and families in Virginia, Maryland and the District of Columbia. Recognized as one of the leading trusts and estates attorneys in the Washington Metropolitan area in Washingtonian magazine and Northern Virginia magazine, Dan’s practice centers on incapacity protection, probate avoidance, distribution planning and estate tax planning.

visit https://www.vfspc.com/
Kathi Ayers, Esq., is a Principal with Vaughan, Fincher & Sotelo, a firm dedicated to providing comprehensive estate planning solutions to individuals, couples and families in Virginia, Maryland and the District of Columbia. Recognized as one of the leading trusts and estates attorneys in the Washington Metropolitan area in Super Lawyers, Kathi’s practice centers on incapacity protection, probate avoidance, distribution planning and estate tax planning.

visit https://www.vfspc.com/