Preparing for the Future: The Pros and Cons of Probate

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Preparing for the Future: The Pros and Cons of Probate

Steve Howards - Guest Blogger

A will offers a method for providing instructions regarding the handling of your financial affairs and the distribution of assets to loved ones after your death. It is a legal document that must be authenticated by a court after you die in a process known as probate. The probate process also ensures that your wishes are carried out according to the laws of your state. Taking a look at probate will give you a better understanding of its pros and cons along with possible alternatives.

What is probate, and how does the process work?

Each state has its own laws pertaining to the specific court that handles the probate process and the procedures the court uses. As a general rule, the family of someone who dies leaving a will starts the probate process by filing an application with the court along with the original will. The court process involves the following steps:

  • Authentication of the will: The court verifies the authenticity of the document as the last will and testament of the deceased through affidavits from the individuals who acted as witnesses to its signing. Sometimes, courts hold a hearing to allow anyone objecting to the document’s authenticity to be heard.

  • Appointment of an executor: One of the key components of a will is its designation of the person named by the deceased to act as executor. The executor gathers assets, pays estate debts and taxes, distributes assets and carries out the wishes of the deceased. The power or authority to carry out these duties comes through an order from the court handling the probate of the estate.

  • Posting a bond: Depending upon the instructions contained in the will, a court may order that a bond be posted as security for the faithful performance of the duties entrusted to the executor. Courts may dispense with the bond when there is a provision in the will directing that it shall not be required.

The court oversees the executor’s handling of the estate by requiring periodic reports to show the executor has gathered assets, paid funeral expenses and debts left by the deceased, filed tax returns and paid estate taxes, and distributed remaining assets according to the terms of the will.

Authentication of the will and the order officially granting the executor powers to act on behalf of the estate are essential steps in carrying out the wishes of the deceased. Until they occur, the executor does not have the legal authority to act on behalf of the estate.

The pros and cons of probate

There may be variations in the pros and cons associated with probate depending upon the complexity of the estate. For example, probate of the estate of a person owning homes in several states may be more complicated than probating an estate with assets located only in one state. The reason is that probate proceedings may be required in each of the states in which the real property is located.

As a general rule, some of the pros favoring probate include the following:

  • Offers a method for resolving conflicts among family members: Disagreements may arise among surviving loved ones of the deceased about the manner of distribution of the estate assets. Probate offers a forum to have those disagreements heard and resolved. When a probate application or petition is filed with the court, anyone objecting to the authenticity of the will or to any of the provisions contained in the will may formally raise them. The court will conduct a hearing, if necessary, and resolve disputes or objections to the will.

  • Establishes deadlines for handling estate affairs: State laws set deadlines for settlement of the affairs of an estate and distribution of assets. For example, creditors of a California resident must file their claims for payment within four months after the appointment of an executor in a probate proceeding.

  • Ability to challenge validity of debts: Probate gives an executor authority to review creditor claims for payment and reject those believed to lack validity. The rejection of a claim forces a creditor to sue in court to establish the debt’s validity.

The cons weighing against probate include the following:

  • Probate can be expensive: Probate is a court proceeding, so court costs and fees charged by the attorney for the estate can be substantial depending upon the circumstances involved in a specific case.

  • Probate takes time: Depending upon the complexity of the estate, probate cases can take a long time to complete and the assets distributed to the beneficiaries of the estate.

  • Probate subjects the estate to public scrutiny: The application, court proceedings and the contents of the will become public records in probate cases. Details about the wealth of the deceased and the distribution of assets to loved ones can be accessed by the public.

When probate cons outweigh the pros

Estate planning may offer options for a person who wants to avoid probate. For instance, transferring assets into a trust during your lifetime may allow your estate to avoid probate while distributing your assets according to your wishes after death. Reviewing the pros and cons of probate with an estate planning attorney may offer alternatives to probate based upon your specific circumstances.

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