When you start to get serious about planning your estate you will invariably do what we all do when we are interested in a topic that is new to us: pop the term into a search engine. When you do this, you will find a lot of information about probate avoidance strategies.
This is all well and good…but what exactly is probate, and why would you want to avoid it?
To answer part one of the question, probate is the legal process of estate administration. When you die using a will as your primary vehicle of transfer its validity must be determined by the probate or surrogate court. During the process all valid claims against the estate must be satisfied, and if anyone wants to contest the will their arguments would be made before the probate court. Once the will has been declared valid and all debts have been paid, the assets in the estate must be inventoried by the executor. He or she will then distribute them in accordance with the wishes of the deceased as elucidated in the will.
The reason why many people want to avoid probate is because it can be time consuming, and costly. Depending on the complexity of the estate and whether or not the will is being contested, the probate process can take anywhere from several months to several years to run its course. As for expenses, there is the fee that must be paid to the probate court, attorney fees, and possible accountant fees, appraisal fees, and liquidation expenses. This can add up and reduce the value of the estate by 2 to 4% or more in some cases.
Why avoid probate? The simple answer is to save your heirs two of the most precious commodities there are: time and money.