Lindsey, I keep hearing that I need a trust to avoid probate, but what exactly is probate and why is it so bad? – Jamie
Jamie, probate is the name for the court process by which the person you name as personal representative or executor in your Last Will and Testament gets authority from a judge to carry out your wishes. That’s right! Your personal representative has to go Court to carry out the instructions you leave in your Last Will and Testament.
In theory, this is a great idea. It assures that a judge, trained in the law, watches over your personal representative as he or she executes your Will. But, the downside of probate is the amount of time it takes and the cost.
First, the probate process generally takes, at minimum, eight months to complete. This is eight months that your spouse, children, grandchildren, or other beneficiaries have to wait before they receive the inheritance you left for them. This is because once the probate is opened, a notice must be run in the newspaper and there is a six-month creditor waiting period. There is also an additional 60-day waiting period after the estate’s inventory and accounting is filed. In reality, eight months is actually a fast probate. I’ve seen probates drag on for years.
Next, the cost of probate is also something you want to avoid. Filing fees with the Court ($165-$240), notice to all known creditors by certified mail ($12 each), and running a notice in the newspaper ($150-$200) are the small costs. In addition, your estate will need to pay your personal representative, and because this is a court process, usually an attorney. Both of these fees are set by statute and total about 6% of your estate. So, if the only asset in your probate estate is your $150,000.00 home, you are looking at $7,000 in fees!
I could go on and on about the time and costs involved, but hopefully this taste will help you understand how much you really need a plan. Contact us today for your free strategy session!