It is not uncommon for people to state that probate should be avoided. However, many people have no idea why. Unfortunately, too many people only find out the answer when they have waited until they have no other option and they go through a probate administration proceeding.
When someone dies without a trust and they own real estate of any value or other assets worth more than $166,250.00 a probate administration is required to pass their property to the beneficiaries of their estate. This is required if they have a will or if they do not have a will. A trust typically does not have to be probated. A will does have to be probated.
A probate administration is a court proceeding where a person petitions the court to be appointed to administer the decedent’s estate and then follows very specific laws to collect and protect the decedent’s assets, pay the decedent’s bills and then distribute the remaining assets.
It sounds simple, but it is not. A very simple probate administration takes at least 6 months to a year and every step is subject to court scrutiny. Particular forms are required by the court at each step and if they are incorrect, they must be redone which typically causes delay and further expense. People who try to handle a probate without an attorney often find themselves returning to court repeatedly, baffled by what is being asked of them and being subtly, or sometimes not so subtly, persuaded to consult a probate attorney by the court.
The fees attorneys are paid for getting an administrator through the process are based on the value of the estate and are expensive, even for small estates. The reason is because of the complex requirements of the process and the fact that the attorney is typically paid at the end of the process, after working on the matter for many months. For example, attorney’s fees in an estate consisting of only a house worth $400,000 would be around $11,000. The administrator would also be entitled to compensation of about $11,000. Additionally, court costs would be approximately $3,000.
When weighing these costs, including time and hassle, against the costs of a typical estate plan that incorporates a trust ($2,000 – $2,700), you can see why so many people are establishing trusts for themselves and their loved ones.
Although a trust is appropriate for many families as a way to avoid probate, it is not the only way. In small uncomplicated estates the use of beneficiary designations, pay on death accounts and joint tenancy deeds can often be used in lieu of a trust. However, there are pitfalls with using any of these techniques that a discussion with an estate planning attorney can help you avoid. Regardless of the technique that best suits your needs, virtually everyone wants to avoid probate.
Probate accounting is a type of accounting required by the courts in probates and also in conservatorship, guardianship and court supervised trusts. The format of probate accountings, also sometimes referred to as fiduciary accountings and formal accountings is spelled out in the law. It is very specific and complicated. In fact, many accountants find the requirements of probate accountings to be counterintuitive to general accounting principals. Anyone who must prepare a probate accounting should seek the advice of an attorney and/or accountant who has experience with this particular type of accounting well in advance of the date the accounting is required.