Estate matters are handled by the probate court. If you use a last will to state your final wishes, the probate court would supervise the administration of the estate. Probate would also be a factor for you pass away with no estate planning documents at all.
Contrary to popular belief, because of the existence of probate, a last will may not be the most cost-effective estate planning device. There are quite a few different costs that will accumulate during the probate process.
The court charges a filing fee, and the estate executor or personal representative is entitled to payment. Probate is a legal process, so a probate lawyer will be retained in many cases, so there are potential legal expenses.
During probate, the executor must notify creditors about the decedent’s passing. Final debts must be paid during probate, and this would include taxes. The executor will often bring in an accountant to assist, and this could add to the debit ledger.
Property must ultimately be prepared for distribution to the heirs to the estate. Appraisals may be necessary, so there can be appraisal expenses. Liquidation charges can also present themselves, and there can be various different miscellaneous expenses.
There is no particular number that we can share with regard to the exact cost of probate, because the total costs will depend upon the circumstances. However, when you add up all of these expenses that we have looked at here, you can see that they can be considerable.
The money that is spent during probate is money that would have otherwise gone to the inheritors, so these expenses can be damaging.
Avoiding Probate Expenses
If you take the right steps, you can get assets into the hands of your loved ones after you pass away outside of the probate process. One commonly utilized probate avoidance tool is the revocable living trust. You do not have to be wealthy to benefit from this type of trust, and you don’t lose control of the assets while you are living.
When you create the trust, you create a trust agreement. In this agreement, you name a trustee to administer the trust after you are gone. This trustee would follow your instructions after you pass away, and assets would be distributed in accordance with your wishes. The probate process would not be a factor.
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