While probate court serves several functions, including handling guardianships and conservatorships, this article focuses on its role in administering an estate after a person dies.

What Is Probate?
        Probate is the process of first proving a Will is genuine and properly executed, and then distributing the property and paying the debts of the estate; in cases where thre is no Will, probate is still the legal procedre used to transfer a decedent's property to those legally entitled to it.  In a probate proceeding, the court oversees the process of identifying the deceased person's property, paying any debts, identifying the proper heirs, and distributing the property to them.  Most of the actual work is done by an executor (usually a relative or friend of the deceased person), with the assistance of an attorney and sometimes with the help of other experts, such as accountants or realtors.

         Some property is not subject to the probate process.  Life insurance, retirement accounts, and "joint tenancy" property all pass directly to the appropriate beneficiary automatically, without any court confirmation.  If the decedent created a "Living Trust," property held in the trust is not subject to probate.  A bank account or motor vehicle title may also specify a death beneficiary.

Benefits of Probate
       Probate does provide some important benefits.  Most important, it provides some court supervision to make sure a decedent's person's property is accounted for and distributed as intended.  Without probate belongings may "disappear", never to be found again simply because there is no formal accounting.  Probate also provides a very clean means of transferring title to property -- court order.  It also creates a process to fully and finally dispose of any claims by creditors.  Once the probate "creditor's claim period" expires (6 months after the executor is appointed, or at least 6 months after publication of the notice of the period beginning to run) it is very difficult for creditors or others to claim any interest in the estate.  For a professional (such as a doctor, accountant, or attorney) or for anyone facing the possibility of a lawsuit for breach of contract, probate may bar later lawsuits that would otherwise be difficult to defend without the help of the deceased person.

Drawbacks of Probate
       Delay: Formal probate takes at least six months, very often takes more than a year, and it is not at all uncommon for the probate of an estate to take more than two years, even when the estate is not particularly large or complicated.  Sometimes, probate can drag on for several years, or in rare situations, for decades.  Delay itself is not always major problem, and if special needs exist, the probate court might allow preliminary distributions or payment of an allowance to family members.  But small businesses or professional practices can end up going under as a result of delays coming from probate; clients can be lost before a sale can be completed or before court approval required for some needed change.  If a deceased person owned stock options related to employment, or if they owned regular stock in the market, delays of even a few days can be very costly.  Delays of even a few months can result in the asset becoming worthless.

       Expense: Between court costs, attorney's fees, executor's fees, and other expenses, probate can be expensive, easily ranging from $5,000 to $15,000 even on a relatively small and uncomplicated estate worth no more than $100,000 at death.  For larger estates the expenses tend to be higher in absolute dollar amounts, though the percentage of the estate going to expenses will generally be lower.

        Challenge: The very fact that the probate process exists invites challenges to the Will or claims on the estate.  All of the assets sit around asking for claims to be made against them.  Since generally nothing is distributed until after challenges and claims are complete, the assets serve as a very attractive target.   Additionally, the probate process requires that relatives and creditors likely to make a claim are notified very early in the process of their right to file a claim, essentially encouraging claims or challenges to the estate.

        Family Dispute: The longer the delay, the more likely family members will end up feuding with each other over money, furniture, old jewelry, and a million imagined slights through the years.  This kind of bickering will sever family relationships with painful finality.

        Public Nature: With very rare exception, everything in court is public, and anyone off the street can ask for the court file and read any of the papers filed in a case.  This means anyone can read your Will, and anything else filed in the probate of your estate.  Personally, for me, that would make absolutely no difference.  Once I'm dead I really don't care what anyone knows about me, but if it concerns you, then you might want to avoid probate.

        Taxes: The probate process does not add any taxes itself, but property disposed of through good estate planning outside of the probate process can often save heirs a great deal of money in taxes.  So it's not that probate creates any new tax burden on the distribution of an estate -- it just makes it very difficult to use some of the techniques available to legally avoid taxes on assets given to your heirs or beneficiaries.

        Finally, even if probate is avoided, some of the fees might not be.  An attorney and/or accountant may be needed to help administer a deceased person's trust or non-probate estate.  Depending on the wording of the Living Trust, the trustee may be entitled to a reasonable fee for managing the trust, although many family members do not actually request fees; the Living Trust can also be drafted to specifically deny any fee for the trustee.
 
 
 

back to Jes Beard's home page	Why It's Worth Your While to Avoid Probate by Mary Randolph      Copyright © Nolo Press  This article originally appeared in the Nolo News and is adapted from 8 Ways to Avoid Probate, by Mary Randolph.
	During probate proceedings, a deceased person's will is brought to the local court, and its validity examined. (If there is no valid will, the court determines who, under state law, stands to inherit.) The deceased person's property is inventoried and appraised, relatives and creditors are notified, and a notice is published in a local newspaper. Creditors make their claims, and debts are paid. Eventually the remaining property is distributed to the inheritors.  What's wrong with this process? Lots, including:  It's a waste of money. The cost of probate varies widely from state to state, but attorney, court and other fees often eat up about 5% (or more) of the value of property left behind at death. The cost might be justified if probate really did something for families. But in most instances, there's no need to be in court.  It's a windfall for lawyers. A lawyer who accepts a probate case is almost guaranteed a nice profit for very little effort. Generally, probate entails lots of tedious paperwork, most of which is done by legal secretaries and paralegals.  It takes too long. Often, probate takes a year or two, during which the beneficiaries generally get nothing unless the judge allows the immediate family a modest "family allowance."  It is public. A will -- a very personal document, which may reveal much about both someone's financial and family circumstances -- becomes a matter of public record after its writer dies. It can be inspected by anyone who goes to the courthouse and asks.  Each state requires a court proceeding. Usually, probate takes place in the county where the deceased person was living. But if there's real estate in another state, a separate probate proceeding there is usually necessary.

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