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What is Probate and Why Should I Avoid Probate

Written by: Daniel Holden Alexander

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Posted over 2 years ago. Applies to California, 4 helpful votes, 0 comments

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What is Probate

Probate is the orderly administration of your affairs supervised by the court. Probate is a function of state law and varies from state to state. If you own real property in more than one state, it is probable your estate will be subject to probate in numerous jurisdictions, each imposing their own probate fees. Probate comes from the Latin word "to prove". A will must be presented to the probate court and proven to be a valid document. In addition to "proving the will" the probate process also includes: • Officially confirming the personal representative named in the will or appointing a representative, if necessary. • Notifying the court of a deceased person's death and informing all involved parties (all potential heirs whether named in the will or not) that probate has started. • Taking an inventory of all property and appraising its value. • Paying the deceased person's debts and taxes. • Preparing a final accounting to the court. • Distributing the remainder of the heirs.

Why Should I Avoid Probate

The Disadvantages of Probate - Time Consuming: The probate process can take a few months or as long a several years to complete. The average probate can take about 15 months. In complex situations probate lasting 18 months to three years is not unusual. - Costly: Fees to probate an estate can run into thousands of dollars. In addition, the executor, inheritance tax referee, and other officers of the court must be compensated. All related probate fees must be paid before any of the decedent's assets are distributed to the family. The average cost of probate is 10% of the gross estate (ie a $500,000 estate would cost about $50,000 to probate). - Loss of Control: The probate court controls the entire process. Someone "on the outside" will tell your beneficiaries who gets what and when. - Lack of Privacy: All probate transactions are a matter of public record. This can be embarrassing and frustrating for your family, create disputes, and expose your family to unscrupulous solicitors.

How Do I Solve the "Probate Problem" - A Properly Funded Living Trust Eliminates Probate

One of the better estate planning alternatives is a Revocable Living Trust, also called the intervivos (Latin for "while living") trust. A Revocable Living Trust is a simple way to make certain your estate assets are distributed as you desire. 1. It is "Revocable" because you can change the terms or cancel it at anytime during your life. 2. It is "Living" because the trust takes effect while you are still alive. 3. It is a "Trust" because it creates a place where assets are available for your normal use now and will be available for distribution at your death. The individual who creates a trust is called the Grantor. The individual who manages the assets placed in the trust is called the Trustee. The individual who receives benefit or enjoyment from the assets inside the trust is called the beneficiary. Even though you transfer legal ownership of your assets to the trust, by naming yourself as trustee of the trust, you keep complete control over your property.