Avoiding probate is a common goal for individuals deciding how they want their money and property to be handled when they pass. It is a worthy one and is regularly promoted by estate planning attorneys across the nation. However, probate is not an inherently bad process and does not always need to be avoided.
Probate can be simply defined as the court-supervised process of distributing a deceased person's money and property—the key word being “court-supervised.” Court supervision has both pros and cons. In most cases, emphasis is rightly placed on the complexities associated with court involvement. Namely, court supervision makes the process of distributing money and property a public proceeding that is subject to timelines that are slow and often drawn out. The cost of court involvement also complicates matters.
These factors vary depending on the value of the money and property in question and the state laws that govern the proceeding. However, many of these seemingly negative attributes can also be positive ones in limited circumstances.
When you are evaluating your options, the benefits of probate may outweigh the cons in the following situations:
- when there are concerns regarding the proper execution of the deceased's wishes,
- when there is an increased likelihood of family disputes, and
- when there is significant debt and concern regarding the estate's ability to pay those debts.
Let's consider each of these factors individually.
Concerns regarding the Proper Execution of Wishes
In some instances, you may have difficulty identifying individuals whom you believe will really honor your wishes for how your money and property are to be managed and distributed. In such cases, you may want the probate court to oversee the process and ensure that your wishes are carried out according to your documented plan, as long as what you have requested is allowed under your state's default rules.
Concerns regarding Family Disputes
Probate proceedings may also be warranted when there are family disputes or conflicts between heirs (those legally entitled to your money and property at your death). Although privacy is often valued when it comes to family matters, the public nature of probate proceedings may promote accountability among family members in such cases. Heirs who might have acted unscrupulously or unfairly may be restrained if a judge is overseeing the proceedings.
The formalities of probate proceedings may also prompt more reverence for your wishes. As a result, even if some heirs are dissatisfied with your outlined wishes, they will be less likely to contest them because of the court's involvement. Moreover, there is a finality associated with judicial processes that could further encourage an individual to honor the judge's ultimate decision. Whether court involvement preserves family dynamics depends on the specific circumstances. However, the court's objectivity can make the process easier to navigate.
Concerns regarding Significant Debt and Insolvency
When someone dies, the law requires that, in addition to providing for heirs, the estate (all the money and property the deceased person owned) also pay off any of the decedent's outstanding debts or bills. This requirement can be a challenge if the bills and debts are high relative to the estate's value. When someone is insolvent, they do not have enough money to pay bills or debts. Insolvency can also exist at death if someone dies owing more than what their estate is worth.
The probate process can be extremely valuable in such circumstances because the court can determine how creditors are paid and how much they receive. Further, because of the structured nature of probate processes, creditors who want to be paid from the estate must submit to the court's requirements. One requirement is that they make their requests known within a limited time frame. Failure to adhere to the court's timeline can restrict a creditor's ability to show up in the future and ask for payment. In most instances, debts not satisfied are lost. As a result, probate may facilitate greater levels of loan forgiveness for an estate.
The probate process can also facilitate paying off the estate's outstanding taxes. By handling these elements, the court-supervised provisions support settling the estate in a way that avoids future issues.
What should I do next?
Making decisions about how to handle money and property when emergencies arise requires considering many different factors. The factors discussed above are only a small sample. Therefore, it is essential to really understand exactly what money and property are at issue, the nuances of the probate process in your state, and the overall goals and values that you want to preserve by passing on your money, property, and legacy. In assessing these various factors, you will be able to consider the available options and select the one most likely to produce the desired outcome.
If you or a family member are in the process of planning for your death or incapacity (inability to make decisions), please reach out to us to meet with our experienced estate planning attorney. We will help you evaluate your current situation and identify the types of plans that will best effectuate your wishes and protect your loved ones.
There are no comments for this post. Be the first and Add your Comment below.
Leave a Comment