Why Is It So Important To Avoid Probate?
We often discuss why certain state planning methods are beneficial because they avoid probate. But why is it a good thing to avoid probate—why put all this work into avoiding probate?
Why is Probate Necessary?
When you pass away, your property has to transfer to someone else. It may pass to your beneficiaries by your written will, if you have written one, or if you haven’t written one, it will pass in accordance with California law, but either way, property has to transfer from you to whomever.
But you aren’t around to sign the documents that are needed to transfer your property. Your will doesn’t automatically transfer property—it just tells the world who you want your property transferred to, which is why a will, by itself, does not avoid probate (although it still has other benefits). That means that only a court can legally pass property from person A to person B. Hence, the probate process is needed to effectuate this.
Probate is Slow and Expensive
Here in the Los Angeles County area, Probate administrations are taking around 18 months to complete. That is 18 full months where your assets are not in the hands of your loved ones and unable to be used. And that’s just if you have a relatively simple case. Probate administrations can take much longer, in some cases, up to several years.
Probate is usually much more expensive than creating a trust beforehand. The costs of probate are dependent upon the size of the probate estate. For example, if your $1,000,000 house passes through probate, it can cost around $50,000 to complete the process. It doesn’t matter if you have a $900,000 mortgage on the property, either. The probate fees are calculated on the value of the assets, ignoring any debt on them.
Probate is Public
For most people, probate is not a complex process, but it still is a process, and a legal one that involves the courts. That means, most people will want to avoid it.
The court system is inherently public. In most cases, there will have to be an inventory of your belongings filed, and a copy of your will filed in the public records. This makes your personal belongings publicly available—you can actually see online the wills of many deceased stars whose wills have had to be probated.
Probate makes it much easier for creditors to make claims. Probate cases are made public, and many creditors scan the record books to see when people have passed away. So long as the creditor makes a claim within a set time period, the creditor may be paid out of the assets of the estate, unless the claim is disputed (and disputing a claim is yet another court process).
The court is involved in disposing of your assets, or transferring them in probate—and that means the court has a say in almost every aspect of that process. For example, selling a home in probate is not like selling a home outside of probate. In probate, you may need court approval for the realtor, the sale price, and other details. This all adds not just cost and complexity, but time. Your beneficiary may want to sell your house as soon as possible, to get access to funds or take advantage of a great offer. But getting into court for approvals and hearings can take a lot of time, making even an “easy” estate a time consuming process to probate.
Call the Torrance will attorneys at Samuel Ford Law today to discuss the probate process, and how to best avoid it.