Probate: To Avoid or not to Avoid

The first probate-related question you have to decide is whether to try to avoid probate. For years, a big-selling nonfiction book was How to Avoid Probate. But the need to avoid probate has been lessened in recent years, as simplified procedures (such as the independent executor provisions) of some states have reduced or eliminated many of the hassles and charges. Though delays are possible, the average estate completes the probate process in six to nine months, depending on state law. And the reformed probate procedures in many states now make it possible for your spouse, minor children and disabled children to obtain the money they need to live on almost immediately, without waiting for the entire estate to clear probate.

For some people--such as those who own considerable property in states other than the one in which they reside, or who need rapid administration of their assets such as stock speculators or people who own businesses in volatile markets, those who live abroad, and some others--probate avoidance should be the primary goal of their estate plan. They might be well advised to put their property into a living trust. But for many other families, especially those of moderate means, it can actually be more trouble to avoid probate than to go through it.

Despite its sometimes cumbersome nature, probate does help assure that those--and only those--entitled to take part of your estate do so, even if takes them a year to get their share. It reduces the time for creditors to present claims against the estate. While it’s a public proceeding, how many of us are really worried about someone’s going through our estate records? Probate privacy, though highly touted by living trust salespersons, is usually the concern of celebrities and the ultra-rich, not the rest of us.

If you do intend to save money by avoiding probate, be sure to use one of the methods outlined in this book. That probably means seeing a lawyer. Don’t make the mistake so many people eager to avoid probate have--using one-size-fits-all-estates forms from a book or computer program that doesn’t take into account all your estate planning needs (such as providing for your family) and the peculiarities of your individual situation.

And please understand that you can’t avoid probate by not having a will. Even if you don’t write a will (i.e., if you die intestate), you’ll still have one--the one the state writes for you. The court will appoint a personal representative--the administrator. The administrator’s job is essentially the same as the executor’s; the only difference is that he or she is appointed by the court instead of being selected by you in your will. Probate will take place, but will cost more and take more time because you didn’t leave a will.

Probate isn’t all bad, but if you can minimize the court’s involvement, you should, especially if you live in a state that doesn’t have alternative or simplified procedures, or your estate doesn’t qualify for them. Probate avoidance tools include living trusts, joint tenancy, and life insurance. Using these techniques, most of your assets will be distributed outside the probate process. Even though you still need a will, it will likely be so simple and dispose of so little property that the cost and time it takes to see it through probate can be minimal.

One potential probate-related problem worth worrying about is the freezing of assets that automatically occurs in some states when a person dies and his estate goes into probate. Even jointly held bank accounts are sometimes frozen until state tax authorities can assess their value. Some state laws allow the spouse to receive some or all of the funds within a few days of death, but some do not. Lesson: When planning your estate, find out your state’s law, and make sure your survivors have some freeze-proof method of getting hold of money during whatever the period of delay is in your state.

Be a Wise Consumer

For most people, the complexity of the probate procedures of the state you live in is probably the single most important factor in deciding whether to use probate avoidance techniques. Ask your lawyer to advise you about the probate system in your state (and in any other state in which you may own property) and whether probate avoidance should be one of your principal estate-planning goals.