Experiences in life motivate us to take action. People often contact my office when they have a big trip planned and start panicking that they don’t have their “ducks in a row.” Another common trigger is the birth of child and the recognition of the importance of designating guardians in order to avoid foster care. I also get several emails and calls after a client’s loved one passes away and they experience the dreaded probate process.
Probate is necessary when a person passes away with no estate plan and owned assets in his or her individual name with no payable on death beneficiary. Each jurisdiction has a probate process. The specific procedures, fees, timelines, forms, and hoops to jump through vary, but, overall, it is nice to avoid probate.
Cutting to the chase: Probate is time-consuming, expensive, and PUBLIC.
As I mentioned on my home page, I am the third attorney for a probate matter in Fairfax County that was originally opened in 1983. While it is incredibly uncommon for probate to drag on this long, probate typically lasts at least a year and, during the process, there is a period of time when assets must be frozen to allow creditors to file claims. The poor soul who is your Executor (or administrator or personal representative) must file specific forms at specific times or be held personally accountable and pay delinquency fees.
Let’s assume your Executor files in a timely manner and avoids those delinquency fees, well, there are plenty of other fees to consider. There are probate taxes, filing fees, publication fees, and bonds. I just helped a client file a second accounting for her deceased husband’s estate and she had to write a check for just over $1,800. That fee was just to cover the annual accounting filing fee.
Most people like to keep their financial information private, but probate allows anyone who is interested in your estate to access information on your probate assets. These interested parties oftentimes include fraudulent creditors. I helped parents navigate the probate process in DC after their son’s very untimely death a few years ago. The parents lived in the northeast and their son lived in DC. He was an adult and had an independent life like many young adults. After his passing, a creditor filed a claim for just over $6,000 claiming that the son had a debt with them. The parents were going to pay the claim because they assumed it was legitimate. It was not and luckily we disproved it before they paid. Unfortunately, scam artists will even go after the assets of a decedent.
All of these headaches can be avoided with a properly funded revocable trust.