Many people have been told that it is important for people to “avoid probate.” But just because people may have heard that term, doesn't mean they know exactly what probate means, why it can be a problem or how to successfully avoid it. In this post, we will take a look at the term probate to understand exactly what it means, and what the process includes.
What is Probate?
The term probate most literally means “to prove” a will. Today it covers the entire legal process necessary to settle a person's estate after they die. The appointed representative (usually a family member) opens the probate case in court. With the court's help, they will work through all of the financial business that the decedent left behind. For example, probate includes disposing of personal property, money, real property or anything else that the deceased owned at the time of their death. Probate also deals with any debts that were in existence at the time of death.
Why is Probate Such a Negative Thing?
Probate is not inherently evil. It is simply a system created by the Michigan legislature to oversee the way estates are handled in the absence of estate planning. However, there is some truth when people say that probate should be avoided, if possible. Some of these cons are listed below.
A Lack of Privacy
Probate cases are filed in the court and are in the public record. If for any reason a person wants to maintain a sense of privacy after they die, it could be a good idea to avoid probating the estate in court. Famous people or other potentially controversial people usually don't want their financial and family affairs dragged out into the open.
Probate Can Create Family Disagreements
One reason that wills and estates are probated in court is to allow interested persons the chance to represent their own claim on the estate by challenging or contesting a will that does not favor them. For people with complicated family dynamics, unpopular second marriages or estranged loved ones, avoiding probate should be a top priority. When an estate is handled through non-probate channels, it becomes much less likely that a will may be successfully challenged.
Probate Can Be Slow
Like most things that end up in court, probate can be time-consuming. In more complex estates, the entire process can last months or years, depending on the nature of a particular estate. And, while the family waits for this time to pass, the decedent's assets or property may be slowly losing value.
Probate Can be Costly
Probating an estate may require the help of a competent probate lawyer to facilitate the matter, which will involve incurring legal fees. There are also court filing fees and an inventory fee based on the value of the estate. With proper pre-planning, some or all of this cost may be avoided.
How Can Families Prevent the Need for Probate?
Creating a smart estate plan is the best way to avoid probate. You and your attorney can work together to draft the proper legal documents and carefully time asset transfers.