At our death, everything we own can go to only three places: family and friends; charities; and the government. If we do not decide how our possessions will be distributed, the government will. And there is not one example where the government distributed the accumulated assets as the deceased person would have wanted.
When it comes to estate planning, actor John Wayne would not be a good example. He passed away in 1979 without a Will, leaving an estate appraised at $12.7 million. Nine years later, his heirs had not received anything, but more than $6 million had been paid out in federal and state death taxes. Probate fees had consumed another $250,000.
Excessive cost, lengthy delays, and a lack of control over your assets are just some of the problems associated with probate. The following are some examples of the problems many families experience when forced to enter probate proceedings.
*Expense: Probate fees are calculated on a statutory scale and based on the gross value of a decedent’s estate. Example: a home may have a value of $600,000 and a mortgage of $300,000. Probate fees are calculated on the $600,000 even though the equity is only $300,000. Here, probate fees would total approximately $30,000-not including filing fees, extraordinary fees, and other costs.
*Delays: Probate generally takes about nine months to two years if all documents are filed at the earliest possible times and no problems arise. This rarely occurs. The court’s authority is required for most actions by the Executor and delays are more than common. They are predictable and expected. It is not uncommon for probates to last longer than two years.
*Publicity: If your estate is probated, anyone can see a) what is included in the asset inventory of your estate; b) who is listed as a beneficiary: c) who is not listed as a beneficiary; d) your creditors; and e) other private family issues that your Will might contain.
*Contestability: Strange as it sounds, sometimes heirs become upset and hire attorneys to contest (“attack”) a decedent’s Will.
The above is not an all-inclusive list of the burdens of probate or the benefits of a Trust. Most families desire to have an efficient, private and inexpensive way to protect their family, both during their lifetime and upon their death. For these families, a Trust is a better choice.
This article is not intended to provide any specific legal advice, and is not a substitute for speaking with a qualified attorney or advisor. Before making any major financial decisions, always make sure to discuss any potential tax implications with a qualified advisor.