What Is Probate and Why People Try to Avoid It
When going through the estate planning process, one of your main goals should be to give your loved ones as much of your assets as possible. After all, they deserve it. You don’t want someone coming in at the last minute and trying to collect what isn’t theirs, or to have the state take some of your money. That just wouldn’t be fair. By learning about what is probate and why people try to avoid it, you can protect your estate, and your loved ones, before it’s too late.
Entz Burton & Associates have assisted Oklahoma families and family-owned businesses with estate planning and business law for over 30 years. Reach out to us today to schedule your free consultation.
The Definition of Probate
Probate is a legal process where the state will distribute your assets after you pass away. If you have assets in different states, then your estate will need to go through probate in each one of those places.
During probate, it will need to be proven in a court of law that a deceased person’s will is indeed valid. Additionally, the deceased person’s assets will be identified, and an inventory will be taken. Property is going to be appraised, debts and taxes will be paid, and the remaining property will be distributed according to the will. If there is no will, the court will distribute the assets in a way it deems is appropriate. This means that if you don’t create a will, your money could go to your next living relative automatically. There are many reasons why people aim to avoid probate, including the following.
It’s a Slow Process
Probate can be very time-consuming. It could take several months – or even a few years – to conclude. If the estate is complicated and it’s in multiple states, then the process will probably take longer. Putting your loved ones through this is not ideal. They may want to wrap up your estate as soon as possible because they are busy with their own lives. It could be emotionally difficult for them. Going through a long, drawn-out process is not a good situation for your loved ones.
There are a number of fees associated with probate, including court fees, executor fees, accounting fees, attorney’s fees, appraisal fees, and business valuation fees. The court is going to take a portion of the estate for its own fees, which could be up to 10% of the estate. This means that your loved ones could lose out on some of their inheritance. If your spouse, children, grandchildren, or other loved ones need that money, they won’t be able to access all of it following probate because of the fees.
Probate Is Public
Do you want to keep the dealings of your estate private? Then you should do whatever you can to avoid probate. Probate is a public process, so anyone can see the inner workings of your finances as well as claim they are owed money. You don’t want people who don’t deserve your money claiming they do. Plus, the public can see what your loved ones receive, making them more vulnerable to shady individuals who may be trying to take advantage of them. You don’t want to leave your loved ones in that position.
How to Avoid Probate
The first step you should take to avoid probate is calling up an estate planning attorney to help you. They will give you the best guidance based on your specific situation. Every estate is different, and having a knowledgeable estate planning attorney on your side is going to be the ideal way to move forward.
Your attorney may have various solutions, including putting your assets into a trust. Then, you can avoid probate altogether. There are two types of trusts people typically use: a revocable trust and an irrevocable trust.
A revocable trust is one that you can change at any time before you pass away. This is the option that most people choose because they want the freedom and flexibility to make modifications if something changes. For instance, their spouse may pass away before them, and they need to change the name of the beneficiary. Or, they might get remarried and want to give their assets to their new spouse.
An irrevocable trust is where a designated trustee gains control over your trust, and you cannot change it once it’s established. People use an irrevocable trust in situations where they could be sued. For example, if they are a doctor they might be susceptible to personal injury lawsuits and want to protect their money for their loved ones. Or, creditors might be going after them. If they need to shield their money for Medicaid purposes, an irrevocable trust could be helpful in this situation as well.
You may also be able to avoid probate by owning property jointly with someone. Then, once you pass away, the co-owner will take over the assets. You could designate beneficiaries on pay-on-death bank accounts as well as transfer-on-death investment accounts, too. It’s important to designate beneficiaries on retirement and life insurance accounts so that money goes directly to your loved ones.
Can I DIY a Trust?
You may find DIY trusts and wills online. While you can DIY a bathroom remodel or a Halloween costume, DIYing your estate plan is never a good idea.
Every estate has its own complications, and you need an experienced professional to decide the best plan of action moving forward. You don’t know the ins and outs of estate law, and you may make mistakes. Your loved ones would have to deal with those mistakes. It could cause a lot of heartbreak as well as fighting amongst family members and friends. You don’t want to leave behind that kind of legacy.
You don’t need a high net worth to establish a trust or hire an estate planning attorney. All you need is to care about the future of your family and what will happen to your assets once you’re no longer here. An estate planning attorney will assist you with ensuring your wishes are fulfilled. Then, you will have peace of mind that everything will be fine, and your loved ones will be protected.
Get In Touch With Entz Burton & Associates
If you need help with estate planning to avoid probate, help your loved ones, and protect your assets, then get in touch with Entz Burton & Associates today for your free consultation. Call us at 405-773-9800 or 800-633-7230, or contact us on our website. We look forward to helping you.
Attorney J. Michael Entz at Entz Burton & Associates is an experience lawyer in estate planning law, business formation and asset protection serving the families in Oklahoma City and Weatherford office.