Picture in your mind the traditional “reading of the will” scene. The camera scans the room of the stuffy lawyer’s office. Bookshelves filled with old dusty law books. A large group of family members seated around the table suspiciously eyeing each other, trying to guess who manipulated grandpa on his death bed to leave everything to them. They’re anxiously awaiting the lawyer to enter the room with the Last Will and Testament. Anticipation builds as the lawyer starts to read. And then to everyone’s shock and dismay the entire estate is left to… dun dun duuuun…
As much as I would like to say that my job includes these ceremonial dramatic moments, it really doesn’t happen this way. If you pass away with assets in your name, even if you have a will, then what will happen is your estate is going through probate.
Probate is the formal court process for getting authority to transfer your assets and pay your creditors. The will is important because it’s your written instruction to the court for how you want your estate to be distributed. Probate starts when the personal representative nominated in the will contacts a lawyer and files a petition in court. The heirs and beneficiaries are sent a copy of that petition and the will. A notice is run in the newspaper, which starts the six month waiting period for people to contest and creditors to make claims.
When that period is over, creditors are paid, the remaining assets are distributed, and the estate is closed. This process is very long and involved, and I only gave you a broad overview of what to expect. If everyone gets along it can take eight months; if there are disputes it could take years. It’s also very expensive. The attorney alone gets paid three to five percent of the value of the estate under Arkansas law. All that to say, probate is not something people typically want to have to deal with, and a will doesn’t avoid this.
The good news is that probate can be avoided through planning. The most common way to do that is by setting up a trust. In a trust—just like in a will—you can specify who you want to wrap up your affairs as well as who you want to receive your property. Unlike a will, with a trust your family will not have to go through probate. Which type of trust you use and how complex it needs to be will depend on your specific needs and wishes.
If you’d like more information to help decide which type of plan would be best for your family, you can call for a no-charge strategy session, or pick up a copy of You Need A Plan at YourPlanMatters.com.