Problems with the Probate Process
If you have ever wondered what will happen to your assets after you die, you are not alone. Many people will have their possessions go through a legal process known as probate. Depending on the size of your estate, or the number of assets you have and their complexity, probate could be an extensive process. At Copelin Financial Advisors, we know that although probate is well-established, there are some serious problems with the entire process.
Probate is the collection of court proceedings and legal documents that are required in order for certain estates to transfer assets to a new party and have the estate dissolved. The process will cover all legal and financial matters, and is tasked with distributing your estate according to your desires. If your desires are not clear, the court will ensure that your assets are divided according to law, and address any disputes that may arise between the beneficiaries of your estate.
The system we know today as probate actually came into existence in medieval times. In those times, land ownership was reserved for only the most powerful families, and estates were usually passed down from father to son. In order to get the most out of the situation, the monarchy got involved and created a system that was complicated and costly, with a large benefit going to the crown.
Today, although the system has been adapted for modern times, it still has the same pitfalls. It is still lengthy and needlessly complex. Although there is no monarch to grab up funds that aren’t his, there are plenty of fees that must be paid before your estate can be fully distributed to your heirs.
Many of the most common problems with probate create a cumulative effect that cannot be avoided by those legally required to engage in the process. This includes the following:
- Probate often requires legal and administrative fees that can cost between six and ten percent of your entire estate, depending on the state in which proceedings occur.
- Because the proceedings are a matter of public record, anyone can access your estate information, including how much was left to each heir and any debts of the estate.
- Most estates take between nine months and two years to settle with complex estates taking much longer.
- Heirs may receive small distributions throughout the process, but often must wait until the dissolution of the estate to receive their full inheritance.
If you are wondering how to avoid probate, you do have options. A Trust is a popular option that may enable your entire estate, or at least a large portion of it, to avoid probate and pass your possessions to your heirs without dealing with years of court proceedings and delays.
Trusts do come with upfront drafting costs and other administrative fees. Depending on the size of your estate, those fees may continue throughout the lifetime of the trust. There are also complex rules and regulations your trust must comply with, so it is essential that you obtain the counsel of an experienced estate planning professional, an attorney and tax advisors to ensure that this is the strategy that would work best for you.