Although the primary function of your estate plan may be to ensure that your estate is distributed according to your wishes after you are gone, a comprehensive estate plan can – and should – also incorporate a variety of additional inter-related goals and objectives. Among the most popular of those additional goals is avoiding probate.
To help you decide if probate avoidance should be one of your estate planning goals, our attorneys at Di Duca Ellingson explain the top reasons for avoiding probate.
Probate Basics
Probate is the legal process that is typically required after the death of an individual. Probate serves several important purposes, including the identification and eventual distribution of the decedent’s estate assets, notification of creditors and payment of estate debts, and the payment of state or federal gift and estate taxes due from the estate. Probate also serves to authenticate, or challenge, a Last Will and Testament if one was left by the decedent. If the decedent left behind a valid Last Will and Testament, the individual named as the Executor in that Will is responsible for overseeing the probate process and the terms of the Will are used to determine how the estate assets are distributed. If the decedent died intestate (without a Will), someone typically volunteers to be the Personal Representative and oversee the probate of the estate and the California intestate succession laws dictate how estate assets are distributed.
Why Is Probate Avoidance Desirable?
People choose to include probate avoidance tools and strategies in their estate plan for a variety of reasons; however, the most common reasons are time, expense, and privacy. Probating even a relatively modest estate takes a considerable amount of time. In California, the probate process will generally take at least a year because creditors of the estate have nine months within which to file claims against the estate and the probate process cannot wrap up until that time period has expired. For a more complex or valuable estate, or one that becomes involved in litigation, it can easily take several years to conclude the probate process. Keep in mind that estate assets cannot be distributed to beneficiaries until the end of the probate process.
Probate can also be very expensive. Everyone involved in the process is entitled to a fee for their time and services, including the Executor, attorneys, appraisers, accountants, and real estate professionals. The larger the estate, and the longer probate takes, the more it will cost. Those expenses can dramatically diminish the final value of the estate that is distributed to beneficiaries at the conclusion of the process.
Finally, probate is a very public process. All documents submitted to probate, including the decedent’s Will, become public record once filed with the court. That means that anyone can learn the terms of a Will filed for probate. If you prefer to keep the terms of your estate distribution private, avoiding probate is the first step.
Avoiding Probate: How You Can Accomplish This
There are several estate planning tools and strategies that can help diminish your estate’s exposure to the probate process, or even avoid probate altogether, including:
Trust – assets held in a trust bypass the probate process altogether. For this reason, many people choose to use a trust to hold the majority of their estate assets in conjunction with a Pour Over Will to ensure that any recently purchased or forgotten assets make it into the trust. This allows your estate assets to be distributed immediately after your death according to the trust terms you create.
Life Insurance – proceeds from a life insurance policy also bypass probate. Life insurance proceeds can be strategically used to achieve a variety of goals within your estate plan.
Joint Ownership – assets owned jointly with rights of survivorship allow your interest in the asset to pass automatically and directly to the co-owner(s) without the need to pass through probate.
Payable on Death (POD) or Transfer on Death (TOD) Accounts — when an account is designated as a POD or TOD account, you name a beneficiary who will automatically become the account owner upon your death without going through probate. The primary difference between a POD/TOD account and joint ownership is that the beneficiary of a POD/TOD account has no ownership interest in the account while you are alive.
Contact Our Chico Probate Attorneys
If you have questions or concerns about avoiding probate, contact the experienced Chico probate attorneys at Di Duca Ellingson by calling (530) 343-3454 to discuss your options or use our contact page to send us a message.