AVOIDING PROBATE: IT’S NOT JUST ABOUT MONEY
As an estate planning attorney, a central goal that I preach is for my clients to avoid probate. Most of my clients associate probate with something akin to the plague and people like bankers, insurance agents, financial advisors, TV hosts and society at large have done a good job educating clients on the simple premise that they should avoid probate at all costs.
Most people would guess the expense. That is certainly a legitimate reason. In Missouri, a probate administration can lead to costs to the court, big expenses being paid to your personal representative (also known as the executor) and, if you want the easy version of probate in Missouri, independent administration, the services of a knowledgeable and experienced probate attorney. In a recent probate, an approximately $450,000 estate ended up costing about $1,000 in costs to the court for filing fees, inventory fees and various other expenses and approximately $31,000 in fees split equally between the personal representative and attorney .
Think about that for a second…that represents almost a 7% loss in the value of your probate estate due to costs and fees, or one more percent than you pay to sell a home! But here’s a big difference…real estate commissions are unavoidable. Probates costs and fees are not.
But forget about money and costs for a second, because there are three other huge reasons to avoid probate, that are largely overlooked.
- Time: In Missouri, you have to wait 10 days after death before you can file in most cases and then the estate cannot be closed for at least six months. Best case, therefore, you are looking at a 190 day process. In most cases, you can add at least a couple of months. In some cases, the estate won’t be closed for at least a year, sometimes longer. So, not only have you lost a loved one, but now as a beneficiary or heir of an estate you have to wait a long time to get your inheritance!
- Complexity: I work on probates every day and while I do a great job for my clients I have to say….I don’t like doing them. Absolutely cannot stand them. St. Charles County has a terrific probate division but many of my probates are in St. Louis County and they are a nightmare to deal with. If you can get through to someone, you will get two different answers from two different people. Every county has a different set of procedural details that must constantly be adhered to, which is tough because those details seem to change by the month. Probates are comparable to getting your teeth pulled. The smallest details can delay them for days and even weeks.
- Family Issues / Strife: Imagine with your family who would be more than a little bit anxious / conspiratorial about an inheritance owed to them. If someone makes out a will and then dies, unlike on TV, there is generally not a reading of the will. That is largely a Hollywood created fiction. In larger estates with a variety of distant relation family members or different beneficiaries (like people that don’t know each other), it might make sense to have a will reading. So people think that something is being hidden from them when the personal representative and the attorney for the estate don’t just cut them a check. Probates cause family tensions and in families where there is already tension, it can only aggravate things. As I noted above, you have to wait at least 190 days in most probates before the estate can be distributed and closed and that’s because creditors have a right to make a claim against the estate. I very rarely authorize early disbursement of an estate for this reason. Who knows who is out there claiming they are owed money. If the money in the estate is immediately distributed, how are you going to get it back if a creditor shows up out of the blue in the last month making a huge claim against the estate?
Half of my estate planning clients are meeting with me because they know they need to. The other half are meeting with me because they just had some terrible disaster happen in there family or watch it affect someone they know, so now they want to avoid it.
Here’s the silver lining: It is easier than ever to avoid probate with a living trust or even without a living trust under some circumstances. In less than an hour Legacy Law Center can sit down with you, figure out what your particular circumstances are, what you need based on those circumstances, tell you what it costs and give you a accurate timeline of when it will be completed, signed and in your hands protecting you and your family.