When you think about the need for an estate plan, you likely focus on the desire to ensure that your estate is distributed according to your wishes after you are gone. While that is certainly a strong motivating factor in the creation of most estate plans, a comprehensive estate plan can accomplish much more. Probate avoidance, for example, is a common secondary goal for many people. Much confusion, however, exists regarding how to structure an estate plan so that an estate avoids probate. The Los Angeles trust attorneys at Collins Law Firm explain how leaving behind a Will does not guarantee that your estate will avoid probate.
Why Do I Need to Try to Avoid Probate?
The details of your estate plan are unlike anyone else’s and reflect your unique needs, wants, and goals. By the same token, the reasons why you want your estate to avoid probate are unique to your circumstances. Nevertheless, there are several common reasons why people make a conscious effort within their estate plan to avoid probate.
- Probate is time consuming – probating even a relatively modest estate takes a considerable amount of time. In the State of California, creditors have four months from the date probate was opened within which to file claims against the estate. Consequently, you can expect it to take a minimum of six months to probate even a modest estate. Meanwhile, probate assets remain out of reach of the intended beneficiaries until the end of the probate process which often means your loved ones cannot utilize the assets you intended for their support.
- Probate is expensive – expenses involved in probating an estate can dramatically diminish the value of the estate that is ultimately distributed. Everyone involved in the process is entitled to a fee for their service, including the Executor, attorney, accountants, and appraiser. Add to those fees the court costs and other fees and expenses incurred during the probate of an estate and it can get expensive rather quickly. Because those costs are paid by the estate, the value of the estate that is ultimately distributed to beneficiaries and/or heirs can be greatly diminished.
- Probate is public – all documents submitted to probate, including your Will, become public record once filed with the court. That means that anyone can learn the terms of your Will, something many people would prefer to keep private.
How Does a Will Impact the Need for Probate?
People often think that the presence or absence of a Last Will and Testament will determine whether or not a decedent’s estate has to go through probate. Unfortunately, it is not that simple. For the most part, state laws govern issues relating to the probate of an estate. In most states, for example, the fact that a decedent left behind a Will has an impact on the need to probate the estate and/or the probate process in general; however, it doesn’t typically replace the need to probate an estate entirely. In the State of California, it is possible for an estate to qualify for a small estate alternative to formal probate if the value of the estate is below $150,000. The key factor in determining the need for formal probate, however, is not the presence or absence of a Will.
Avoiding Probate with a Trust
Although the presence of a Will does not directly impact the need to probate an estate, the presence of a trust way. Assets held in a trust are considered non-probate assets, meaning they bypass the probate process altogether. Since a trust can be used to distribute your estate assets, the best way to ensure that your estate will not have to go through the probate process is to rely on a living trust or a testamentary trust to distribute your estate assets. You should continue to have a valid Pour Over Will in place even if you are using a trust to distribute your estate assets; however, that Will only serves as a safety net to catch any assets that did not make it into your trust prior to your death.
Contact Collins Law Group
For more information, please join us for an upcoming FREE seminar. If you have additional questions about how to avoid probate and/or creating a trust, contact an experienced Los Angeles trust attorney. Contact the Collins Law Firm by calling (310) 677-9787 to register for one of our FREE estate planning workshops.