Avoiding probate in Missouri saves time, money and sanity..
A primary goal of almost all of my estate planning clients is to avoid probate. Probate is the process by which the assets of a decedent are administered through the courts. Most of my clients know for sure they want to avoid probate but they are not exactly sure why.
The purpose of this article is to explain why probate should be avoided.
There are three primary reasons: money, time and sanity.
I mention money first because probate is expensive. Probate fees can include executor fees, attorney fees, court costs, bond costs and miscellaneous. Executor and attorney fees are set by statute and are based on a percentage of the estate. The larger the estate the higher the fees. Court costs are relatively static but add up and can include filing fees, publication fees and service costs. Here are rough cost ranges for different size estates: $150,000 = $5,300 – $10,000; $300,000 = $9,400 – $18,200; $750,000 = $21,100 – $41,400; $1,000,000 = $28,600 – $55,100.
Again, to be clear, probate is expensive.
Time is another component of the probate process and if you ask most people that have endured the probate process they will tell you it takes a long time. First, a probate cannot be filed until at least ten days after someone has passed away. Once a probate is filed, the estate must be left open for at least six (6) months to allow creditors of the decedent to makes claims against the estate.
Practically speaking, however, most estates take much longer than six months and 10 days to close and that’s because the process can be extremely complex. For one thing, the executor has to figure out what the decedent owned. In some cases, the executor (and the attorney for the estate) will spend several months trying to track down all the assets and liabilities of the deceased.
The probate process is very detailed and often involves a lot of phone calls and lots of small steps that are time consuming. That is why I mentioned the “sanity” aspect of probate, as in losing your sanity. The complexity and detailed nature of probate drives people crazy. Add anxious family members waiting on an inheritance and you can see why avoiding the process all together is the best investment of time and money and peace of mind a person can make.
So how can people avoid probate?
The best and most effective way is to establish a living trust. Probate is necessary because when a person dies, the assets are in their name. The probate process ensures that the assets of the decedent go to the persons named in their will or as decided by state law if they didn’t have a will. It also ensures that the debts of the decedent are paid, to the extent they can be.
But the easiest concept to understand a living trust and how it avoids probate is to imagine a box. The living trust is the box which you place all of your assets during life so that when you pass away there is nothing owned by you as an individual. It’s owned by the trust and those trust assets are distributed according to the trust terms. The debts of the decedent are paid out of trust assets, but not through probate. Again, since the trust owns everything, there is no need for probate.
Trusts are a bit more expensive to create than wills on the front end. But as we saw above, the back end costs of a will (in probate) are enormous. Depending on the needs of the client, a trust is a terrific way to save your estate money, time and sanity.