All About Probate
If you've read any of my previous posts or have done any estate planning research on your own, you may have come across the term “probate” or “probate process.” And if you have, you will probably recall learning that the probate process is not a fun one!
In this post, I'd like to share more about probate with you — what it is, why you should avoid it, and what to do if you can't avoid it.
What is Probate?
Probate is the legal process by which a deceased person’s estate is distributed to their heirs. In most cases, property is distributed according to the deceased person’s last will and testament. If there is no will, the property is distributed according to state law.
Will Your Estate Need to Go Through Probate?
You Must go through Probate if:
Your estate is worth more than $100,000
Your estate includes real estate (if you own your home)
You only have a will in place, not a trust (and still meet the above requirements)
You can avoid probate if:
You have a trust that owns your assets (i.e you as an individual do not own the real estate, your trust owns the real estate)
*There are other situations in which you may be able to avoid probate that I won’t go into detail here. If you have any questions about this please feel free to email me!
Why You Want to Avoid Probate
As I’ve mentioned before, going through the probate process isn’t fun! Here are the reasons why you would want to avoid going through probate if you can help it.
Probate Takes Time
It takes quite a long time for your assets to go through the probate process. This means your heirs do not receive anything until this process is over!
You Will Likely Need an Attorney
Your loved ones will likely need to hire an attorney to help navigate them through probate. Attorneys typically have fees, and if you don’t plan accordingly, this could come out of your loved one’s pocket.
Probate Costs Money
The probate process is costly — and I’m not just talking about the attorney fee! The average baseline cost of probate in Illinois is $5,000. This cost increases if anyone disputes it or if you need to go in front of a judge to work through any nuances.
Why You May Want to Go Through Probate
Is there ever a reason that you would want to go through probate? While I typically recommend clients try to avoid probate, there are definitely times that I may recommend it. These instances have to do with the type of profession you are in.
If you work in a field where you are more likely to be sued, you'll almost certainly want to go through probate. Attorneys, doctors, accountants, real estate agents, and other professionals who take on higher liability will fall into this category. This could also apply to professionals with an increased risk of litigation (for example, a business owner that works closely with the public).
Why is this? The probate process can prevent lawsuits and other creditors from accessing any of the estate’s assets after a certain period of time. This timeframe is significantly shorter when you go through probate (about 6 months), rather than avoiding probate (almost two years!)
For those who are at risk of lawsuits, having cases closed after six months is a much better option than remaining open for up to two years.
Making the Probate Process Smooth
Let’s say you can’t avoid going through probate. There are things you can do now that will greatly affect how smoothly and quickly your estate goes through the process. Following these suggestions will help your loved ones in the long run.
Having a Valid Will
The probate process will go more smoothly if you have a will in place that clearly identifies who your heirs are and who your property will go to. It is critical that you select an estate planning attorney who can assist you with this. The court will be able to process the decisions you have made in your will more quickly if it is effectively communicated by your attorney.
Choosing a Good Executor
If you haven’t already read my previous post on how to choose an executor, I highly recommend you read that HERE.
Your executor is the person in charge of EVERYTHING after you pass away! It is critical that you select someone who is capable of sorting through a large amount of detailed information and is conscientious about completing the necessary tasks. To ensure that the probate process runs smoothly, this person must also be willing and able to meet the required deadlines.
Your estate will be held up in probate if your executor is unable to complete these tasks.
Communicating with your family
One of the most challenging things I've found for my clients to do is communicate with their families about some of the decisions they make in their will. I don't necessarily mean that you have to tell them every detail about who gets what (Suzy receives $5,000 and Rhonda gets $100,000!) What I mean here is communicating with your family about a general idea of what to expect.
For example, suppose you have five children and choose one of them to be the executor. In that case, it is extremely beneficial to communicate with all five children about your decision and how this decision has no bearing on your feelings towards any of your kids. Communicating your decision with everyone will reduce the chances of arguments once you are gone. If everyone knows what your intent is, the chance that the probate process goes more smoothly is much greater.
This is particularly beneficial for blended families. For example, a few weeks ago, I received a call from a client's daughter about starting the probate process, however, there was a snag in the process. Apparently, the father's girlfriend was doing things that the daughter didn't agree with. This disagreement will not only cause the probate process to take longer, but it will also cost the family more money.
Remember, a good estate planning attorney will help you determine what this communication should look like with your family. Make sure you do your research before finding just any estate planning attorney!
Organizing your important documents
I’m not just talking about your will! Once your executor begins the probate process, they will require a number of documents from your accounts. Help them help you! Tell them where they can access these documents once they need them. The more organized you are, the smoother the probate process will be!
Any account that sends you a statement, for example, will need to be accessed by your executor. Some examples are:
Life insurance policy
Statements for your all bank accounts (checkings, savins, etc)
Statements for any brokerage accounts
Retirement accounts
Create a Family Tree
Sounds weird, right? Why would you need to create a family tree? Believe it or not, having this information on hand will help you out in the long run! It will be extremely helpful for your executor if you have listed out who your children are, who your parents are, who your siblings are, who their children are, and who your aunts, uncles, and grandparents are.
All of these people could potentially be contacted during the probate process. Having that family tree available will help the executor, the court, and your attorney go through your heirs significantly more quickly, especially if there are family members no longer alive or cannot be reached.
Sum It Up
You will need to go through probate: if you have over a hundred thousand dollars in assets, if you own real estate, if you have a trust, or if you are in a situation where you are in a high liability profession.
If you know your assets are likely to go through probate, make sure you have done the necessary steps to ensure the process goes smoothly for your family!
I hope you found this helpful! If you have any questions, please don't hesitate to reach out. And if you enjoyed reading this post, I would love it if you commented to let me know!
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