Probate in Theory
When a family member dies, probate is the public, court-supervised process of closing out the deceased's estate. Probate law is based on centuries of English legal tradition, and relatively little has changed over time. In theory, a probate court's supervision of the settling of the estate accomplishes several goals:
2) If there is a will, the executor of the estate (named by you) handles the administrative steps to close your estate. If there is no will, the judge appoints a personal representative to do this.
3) Creditors of the estate (people and companies to whom your family member owed money) get notified that your family member has died. They are then able to recover their unpaid debts from the estate.
4) After creditor claims are settled, the executor/personal representative distributes property (according to the deceased's will or state intestacy law).
5) When the executor transfers title of property to its new owners, the executor's letters of office (granted by the court) provide evidence of transfer of title, giving the new owners clear title to the property.
What's Wrong with Probate?
The following are a few of the many reasons Americans have come to greatly dislike probate:
1) It is long. Even in a relatively simple estate with uncomplicated assets, no disagreement among family members, and clear directions for distribution of property, a case typically takes a year to wind its way through the court system. In some Illinois counties, there may be a wait of months just to get on the docket to begin the process. During this time, family members are unable to freely dispose of property, leaving them in limbo. And if there any snags, all bets are off. This article describes a 14-year probate case, which ran up legal bills in the mid-six figures.
2) Probate can be very expensive. Most people find probate complex, and hire an attorney to help them through it. There are many forms, filings, and even court appearances, all of which drive up legal bills. The legal fees in a typical case can end up consuming a small percentage of the estate. Again, any complications in the estate will greatly drive up fees.
3) Probate is incredibly formalistic. Can you imagine invalidating someone's will because a stray ink mark on page 11 of the will touches one of the words? A judge can! How about embarking on an incredibly expensive litigated case because the deceased's witnesses only signed the will once, and forgot to also sign a "self proving affidavit"? Will contests over issues like this can throw your case into turmoil for years, all at great financial expense and cost to the relationships in your family.
4) Probate is public. Any curious member of the community, reporter, blogger, etc can freely write about the intimate details of your family's estate. This could include information about your net worth, financial assets, personal belongings, disputes, etc. During and after a probate case, anyone could soon be reading intimate details about your family's assets on the internet.
What you can do
Modern qualified estate planning attorneys are attuned to the problems with probate, and can counsel you on your individual situation. They are also familiar with common probate avoidance strategies, which we will discuss in the upcoming posts. Living trusts in particular are an attractive option for many families, and will be discussed in depth. Luckily, in estate planning, a small up-front commitment in planning can prevent a nightmare for your family after your death.
Next Topic in the Probate Avoidance series: Living Trusts
Note: The information above is not legal advice and is not the basis of an attorney-client relationship. If you need assistance, you can hire an attorney to assist you with your individual legal needs.