Why Plan Now

Probate Is Not Always Bad

Although many people try to avoid probate, the probate process may be useful in certain situations.  For example, if you fail to transfer assets into a living trust, probate may be needed following the death of a married person to clear title and transfer the assets into the name of the successor trustee of the living trust.

Some families, due to feuding or other dynamics, may prefer the court supervision of the probate process. A young married couple with a modest estate may prefer a will that creates contingent trusts for minor children in the event both parents die (or in the case of a single parent.)  Finally, the probate process contains family protection such as probate homestead and family allowance provisions.

The family allowance, which is statutory in nature, places the welfare of the decedent's surviving family above that of the decedent's named beneficiaries or creditors. The statutory policy is to protect the decedent's spouse and minor children (and, in some cases, adult children and parents) when the decedent failed to do so or when the decedent's creditors might exhaust the estate to the disadvantage of the statutorily protected individuals.  A spouse or children of the deceased could open a probate in order to obtain the protection of the family allowance statute.  Beware - the decedent’s estate plan may provide some benefits to a spouse or minor children that would terminate if the spouse or children sought a family allowance under the family protection statutes.

The probate homestead protects the family home for the benefit of the decedent's spouse and certain other dependents of the decedent, including minor children. The probate homestead also protects the family home from decedent's general creditors, from non-family beneficiaries named in the decedent's will, and from the decedent's more distant intestate heirs. Probate homestead issues often come up when the decedent tries to leave the residence to someone other than a spouse or children. The probate homestead may trump a devise in favor of the current spouse and minor children.

Hopefully, this discussion has shed some light on the probate process.  Probate is not always a bad thing.

Probate De-Mystified

Probate is the process of passing title to property from the deceased person to his or her beneficiaries’ or creditors.  Probate, Latin for ‘to prove’ involves proving the validity of a will (if there is one) and protecting the beneficiaries and creditors of the deceased.  Some people mistakenly believe that probate is avoided through the use of a will.  In fact, anything distributed by will is required to go through the probate process.
 

Property that has a beneficiary designation (and where the beneficiary is surviving and of legal age and sound mind to take ownership of the property) will not be probated.  Those assets will be distributed to the surviving joint tenants, to the named beneficiaries, or according to the terms of whatever document made the asset a non-probate asset.  For example, life insurance, individual retirement accounts, pension plans, annuities and accounts with a P.O.D. (pay on death) designation may avoid probate using beneficiary designations.  However, if a joint tenant or beneficiary is listed but the beneficiary or joint tenant does not survive, then that asset will be an asset that has to go through probate.  Any property held in trust will be non-probate property.

To protect beneficiaries and creditors, the probate process has requirements including written notice to creditors with waiting periods during which time creditors can file claims, written notice to everyone named in the will and everyone who would inherit if the will was found to be invalid.  The national average time to complete the probate process is approximately 16 months. Also, probate fees are involved.  In California, probate fees are set by statute, starting at four percent (4%) on the first $100,000, three percent (3%) of the next $100,000, two percent (2%) of the next $800,000 and one percent (1%) of the next $9 million.

Between the probate fees and the delay caused by the waiting periods, many people try to avoid the probate process entirely.

Next Up: When Is Probate Right For You