Ever seen a celebrity have their entire estate fall victim to the public media? If you have ever spoken with an estate planning attorney, you were likely advised to avoid probate. You should probably get a different estate planning attorney if you were told otherwise. In all seriousness, it is important to understand what probate is and why it is best to avoid it.
What is Probate?
Probate is the process whereby the court administers a decedent’s (i.e., a deceased individual) estate to their heirs. Most people know that your estate goes through probate if you pass without a will. However, a common misconception is that a will avoids probate. Wills do not avoid probate at all.
A will is a legal document that outlines how a person wishes their estate to be distributed after they pass. In Michigan, a valid will is created if the will is (i) in writing; (ii) signed by the individual; and (iii) witnessed by two witnesses, each of whom witness (a) the individual sign the will or (b) the individual acknowledge the will or signature (try saying that three times).
Once the will is filed with the court, the court will appoint a personal representative (the “PR”), the point person the court will look toward to be in charge. If the will does not name a PR, someone will have to petition the court to administer the estate and become the PR. The court will then hold a hearing to determine who that person should be.
Why Should I Avoid Probate?
Time and money are the two biggest reasons to avoid probate. The probate process typically takes one to two years to play out. However, if you consider the current pandemic, that process could take longer.
The longer probate drags out, the more money it costs your estate. It typically costs money to gather all of your assets. On top of that, there are court fees for administering the estate, attorneys’ fees, and the cost of paying off debts.
Another reason to avoid probate is that it is a public process. As such, the administration of your estate is part of the public record. This invites others to contest your estate because anyone will be able to see the distribution of the estate’s assets by searching public records. It is common for beneficiaries to be unsatisfied with what they got or envious of what someone else received and contest the estate to receive a bigger share. Contesting an estate will require more time in court, which means more court fees and attorneys’ fees. Thus, having the estate contested drives the cost of probate up even higher.
Can I Avoid Probate?
There are many reasons why it is beneficial to avoid probate. But the question remains- how can one avoid probate? The best way to avoid probate is by setting up a trust.
A trust is a private document that keeps your estate out of court and provides a flexible way to pass your estate on to your loved ones. The most common trust is the revocable living trust. A revocable living trust will provide you with a flexible way to pass on your estate and offer protection for the people you name as beneficiaries. You can also easily amend or revoke the revocable living trust up until the time you pass or become legally incapacitated. Talking to a good estate planning attorney to set up a solid trust plan is key.
Other ways of avoiding probate include holding property jointly, designating beneficiaries on financial and insurance accounts, and designating pay-on-death bank accounts or transfer-on-death investment accounts. There are pros and cons to each option. Talk to an estate planning attorney to see if these options meet your needs.
Probate is expensive and time-consuming. We have seen our fair share of messy probate estates play out in the public eye. Avoid the headache of probate!
Call Jabbour Law today to set up a free one-hour initial consultation and learn more about your options.