Avoiding probate - the court-supervised process of distributing a deceased person’s money and property - is a common goal for many individuals. The promise of avoiding probate is something estate planning attorneys promote often to encourage people to create an estate plan.
However, probate isn’t inherently bad, and doesn’t always need to be avoided. The keyword in the definition of probate is “court-supervised”. Court supervision has both pros and cons. In most cases, court proceedings can be complex. Specifically, court supervision makes the process of distributing assets a public proceeding, which is subject to slow and often drawn out timelines. Court involvement can also be expensive.
These factors will vary depending on the value of the assets in question and the state laws that govern the proceeding. However, many of these seemingly negative factors can also be positive ones in certain circumstances.
When might the benefits of probate outweigh the cons?
when there are concerns regarding the proper execution of the deceased’s wishes
when there is an increased likelihood of family disputes
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
Let’s imagine you’re having difficulty identifying individuals whom you believe will really honor your wishes for how your money and property are handled after your death. In a case like this, you may want the probate court to oversee the process and ensure your wishes are carried out according to your documented plan (as long as what you’ve requested is allowed under your state’s default rules).
Concerns regarding family disputes
Sometimes, probate proceedings are warranted when there are family disputes or conflicts between heirs. The public nature of the probate process may actually promote accountability among family members in cases like these. Heirs who are acting unfairly may be restrained if a judge is overseeing the proceedings.
Sometimes, the formalities of probate proceedings discourage heirs from contesting your outlined wishes. Even further, there is a finality associated with a judge’s decision that could encourage individuals to honor the result.
Concerns regarding debt
When someone passes away, the law requires the estate to pay off any of the deceased person’s outstanding debts or bills. This can be a challenge if the debts are high relative to the value of the estate.
In circumstances like these, the probate process can be extremely valuable. The court will be able to determine how the creditors are paid and how much they receive. Further, because of the structured nature of the probate process, creditors who want to be paid from the estate are subject to the court’s requirements. One such 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 is my next step?
There are many different factors that may influence your decisions about how to handle your money and property. The situations discussed above are only a couple of examples - you may have a unique situation. Therefore, it’s important 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.
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. We’ll help you evaluate your current situation and identify the types of plans that will best effectuate your wishes and protect your loved ones. Call Santaella Legal Group, serving San Ramon, Danville, Dublin, Pleasanton & the Tri-Valley area, at (925) 831-4840 to set up a consultation.