Creating a comprehensive estate plan typically involves goals that reach beyond the simple division of your assets upon your death. Probate avoidance, for example, is a common goal of estate planning. Understanding the drawbacks of probate will help you understand why you may wish to include probate avoidance in your estate plan.
Probate is the legal process that follows an individual’s death. The purpose of probate is twofold-to account for and value the decedents estate property and to allow creditors of the decedents estate to file claims against the estate. Although some estates will qualify for a simplified probate process most estates must go through formal probate. It is the formal probate process that most people hope to avoid by careful estate planning.
Even a relatively moderate estate can easily take a year or more to probate. Before an estate with complex and/or valuable asset the probate process can drag on for several years. During this time beneficiaries of the estate are not able to enjoy the benefits of the estate assets intended for them. In addition, for surviving loved ones having to endure a lengthy probate is a daily reminder of their loss. For these reasons, the time it takes to complete the probate process is one of the biggest drawbacks of probate.
Another significant drawback of probate is the costs involved in the process. As a general rule, the longer it takes to probate an estate the more expensive it is. Almost everyone involved in the probate of an estate is entitled to a fee for his or her service. At a bare minimum this includes the executor of your estate. The executor is the individual appointed in your Last Will and Testament to oversee the probate of your estate. The more complex the estate the more time the executor will have to devote to his or her duties as executor. The executor is entitled to charge a fee for this time. In addition, the executor typically retains the services of an estate planning attorney to assist with the probate process. The attorney is also entitled to a fee as are other professionals such as an appraiser, a certified public accountant, or property manager. All of these costs are billed to the estate and paid out of estate assets. In addition, any costs involved in the maintenance or upkeep of estate assets during the probate process are also billed to the estate and paid out of estate assets. All of these fees and costs will ultimately diminish the value of your estate, meaning there will be fewer assets available for your intended beneficiaries when the probate process is finally complete.
It should be clear that time and money are two significant drawbacks of probate and are reason enough to include probate avoidance in your overall estate plan.