Probate is a legal proceeding where a state court looks over the process of identifying a deceased person’s heirs, real estate and any debts. The main goal is to make sure the deceased debts are paid in full by the real estate or real property that remains. If there is a will, the executor or representative of the property will work with a probate attorney to sort through the will. If there is no will the courts will apoint an executor.
Probate works only on debts and real estate and is not tied to life insurance, 401k accounts, IRAs, and other types of retirement accounts as these are passed directly to the decedents or beneficiaries.
The three main issues with Probate are time, money, and loss of control.
TIME – the fastest that an executor and beneficiaries can decipher and legally address the probate process is about 6 months to 1 year. These time issues take into consideration family issues, situations, finances and asset dispersion.
MONEY - Because there are court fees, attorney fees, executor fees, appraisal fees, and possible loss of market value on assets the probate process can be expensive. The true cost of going though the probate process can be as high as 10% to 15% of the gross market value of the assets in the estate.
LOSS OF CONTROL – The family that is dealing with probate may suffer a loss of control over family assets. In some cases income producing assets or needed cash reserves have to go through the probate process. The courts typically accommodate family petitions for preliminary distributions or payment of an allowance to family members. Although this may help, the loss of control over their own finances can be a strain on the entire situation.
Probate may seem like a daunting task if it’s one you have to undertake. But the probate system is in place as a method of processing the estates of people who do not take care of their own estate planning while still alive. It orginiated to protect estates, creditors and heirs in situations where the deceased failed to take the appropriate steps to protect themselves. Unfortunately, the probate system has become bureaucratic and expensive and so much so that sometimes it seems like it does more harm than good. In almost all situations, probate should be avoided if possible.
If you may be facing this issue now or in the future, please send me some details so I can assist you to sort out the present and future issues. Deepak@ProbateInSoCal.com