For many people, probate court seems like something to be avoided at all costs. It brings to mind images of an estate bogged down in the legal system while heirs wait for assets to be released.
However, probate court doesn’t have to be the nightmare experience you imagine. Donna Barwick, senior fiduciary officer for Wilmington Trust, agrees there is a stigma to the word probate, but says it is undeserved. “There’s nothing wrong with being in probate court,” she says. “It’s not as important to avoid it as it is to do it right.”
[Read: Will Your Heirs Have to Pay Up When You Die With Debt?]
Of course, if you do want to avoid probate, that can be done, too. Here’s how to skip the court completely, or at least do it right.
Which estates go to probate? The short answer is all estates go to probate. It doesn’t matter whether you have a will or skipped that important step in end-of-life planning. Either way, your heirs will need to go to court before your estate assets are disbursed.
The difference is that with a will, an executor you name will distribute assets according to your wishes. Without one, the court will designate an administrator who will divide your assets according to provisions of the law. “If you have a will, that saves a huge amount of time,” Barwick says. In Georgia, where she is based, completing and filing the necessary paperwork could be done in as little as a day. Then, the executor may be able to start making some payments while the court process continues. “It’s not like everyone has to wait a long time before getting paid,” she says.
[Read: 5 Inheritance Mistakes for Heirs to Avoid.]
Options for avoiding probate. For those who want to avoid probate, there are several options to bypass the system. The first is to make heirs co-owners on bank accounts and other assets. In theory, this sounds good because heirs can simply remove the name of the deceased and then split the account balance without going to court. In reality, these setups can result in one heir legally running off with all the money. That’s because all co-owners have full access to the assets. “The fastest one to get to the bank gets all the money,” says Patrick Simasko, principal at Simasko Law in Mount Clemens, Michigan.
Transfer on death provisions on deeds and accounts are another way people can avoid probate. The main risk with these provisions is someone dying out of order — such as a child preceding a parent. What’s more, if an asset is transferred to a minor, probate may have to be opened to administer it anyway.
Rather than trying one of these options, Simasko says the easiest way to avoid probate is to set up a revocable trust and transfer assets there. Upon death, the trust can then disburse assets to heirs without having to go to probate court first.
[Read: How to Estimate Your Life Expectancy.]
Family litigation is the real problem. John Skarbnik, an attorney and revision author of “Murphy’s Will Clauses,” says people should be less concerned about avoiding probate and more concerned about the possibility of family members taking each other to court. “That’s a lot of people’s worst nightmare — that people are going to fight,” Skabnik says.
In some cases, there may be good reason. “If the nurse comes in for the last three months and suddenly gets everything,” Skabnik says as an example. But in most cases, family litigation is the result of long-standing feuds. “They are fighting over disputes they had as kids,” he says.
Depending on the state, these court battles may be headed off by adding an in terrorem or no-contest clause to the will. This language stipulates that anyone who legally challenges the will loses their bequest. Not all jurisdictions recognize the validity of these clauses, and in these areas, a mediation clause may be a good alternative.
Skabnik says the best way to avoid family fighting is to provide as much of an explanation as possible. This can be done in the will itself, or side letters to specific people can be attached to outline your reasons for divvying assets as you did.
Nobody want to think about their estate languishing in court after their death or family members fighting for a bigger share of the pie. A will or trust can help your heirs avoid a lengthy probate process, and some proactive communication from you may prevent ugly family litigation from undoing all your hard work.
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Will Your Heirs End Up in Probate Court? originally appeared on usnews.com
