What is Probate and Why Should it Be Avoided

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What is Probate and Why Should it Be Avoided?

May 4, 2024

For many of us, one of our biggest financial goals is being able to provide for our loved ones and pass on a legacy of wealth to the younger generations after we pass. Estate planning can be an extremely tricky process, however, and you may not always fully understand how the process works or how to go about achieving this goal. Failure to have a comprehensive estate plan could mean incurring unnecessary costs and taxation and could even mean putting your next of kin in dire straits, as the assets they may be depending on are tied up in a complex and lengthy court process known as probate. If a will is your only form of estate planning, or you have no will, the greatest enemy to your legacy goals will likely be the probate process.

Probate is the legal process of determining the validity of a will and distributing a deceased person's assets to their beneficiaries. If a valid will is in place, probate will provide a court-supervised distribution of the assets according to the parameters of the will. If an individual passes away without a valid will in place, the process of retitling the assets is relinquished to the courts, who will determine who receives the assets based on that state's intestacy laws, which many not always correspond with the deceased's wishes.

One of the major issues associated with probate is how lengthy the process can be. Even the most direct proceedings can take several months, and if problems occur then it can take multiple years to settle. Drawing out the distribution of these assets can create stress for your loved ones and sometimes leads to family division.

Probate is also quite expensive and could consume a significant portion of your estate, especially when the process gets lengthy. The costs and fees of probate include attorney fees, court costs, accountant fees, executor fees, and various other administrative fees.

To ensure that your final wishes and goals will be carried out as you would like, having the proper strategies incorporated into your estate plan is critical. Some strategies to avoid probate include implementing trusts, making sure all investment and retirement accounts have up to date beneficiary designations, and establishing joint ownership for assets if possible. For more information on estate planning, please reach out to our financial planning team.