Why Avoid Probate

Do you have friends or relatives that have experienced probate? If you do, their advice more then likely will be, to do anything you can to avoid it. If you are unfamiliar with probate and the problems it can create, find out what you can do to avoid it. Below is an explanation of the basics.

Probate, What is it?

When someone dies his or her assets are distributed according to the laws of your state. Probate court analyzes the assets, property or money and other things of value. The court will pay any debts for bills owed, and distribute anything leftover to you heirs.

If there is a will involved, the court will follow the instructions specified in the will as long as it follows the laws of the state. If in fact, there is no will, the court will distribute the assets, according to the law. If you are concerned about some people interest more then others, you must leave a will, otherwise the court will have no way of knowing your wishes.

Why Would I Want to Avoid It

Probate is a slow and time-consuming process. It’s a procedure run by the court system. If everything goes smoothly, it can be completed in as little as six months. But for the most part it will take from one to three years. If you have an intricate estate or someone is contesting the will it can go on for years. This can cause a lot of tension for you loved ones, which may need financial help or just want the assets you left to them. It can be very frustrating.

Probate can be Financially Devastating
Every state has different probate costs and it can be very expensive. There is also a fee for the court, which can be as high as 10%. The court takes a financial piece of the estate before any debts are paid. The money is used for attorney fees and other court costs related to the estate. For the most part, if probate is avoided your heirs will inherit more, and receive it quicker. The cost of a will is a fraction of the operating cost that can occur in Probate.

Probate Makes you Vulnerable

Once you become involved in the probate system, some things should be considered. Everything that happens in probate court will be available to the general public. You can become a target for criminals and open a Pandora’s box of possible problems. Everything you receive will be in the public records. If you received real estate, cash or jewelry it will be available in the records. If you have a will, it is private, but probate is not. A complete stranger can look up your records and you can become vulnerable. It seems to be a no-brainer that you would never want your loved ones in the hour of their grief to go threw this process.

So now you know the Basics

One of the avenues of avoiding probate is creation of an inter vivo trust (living trust)

Creation of a living trust is a procedure that will transfer ownership from you to your heirs while you are still alive, and also save them the grief and expense of probate court.

Living Trust of Frank Sinatra

Frank Sinatra died May 14, 1998, at the age of 82 after suffering a heart attack. Like the song, Frank Sinatra did his Last Will his way. The Last Will, dated May 1, 1993, divides most of Sinatra's considerable estate between his fourth wife, Barbara Marx, and his three children, Frank Jr., Nancy and Tina. The Frank Sinatra zinger is that since he was aware of the significant animosity between his children, who were products of his first marriage to Nancy Barbato, and his wife, Sinatra included a clause in his Last Will that automatically disinherits anyone who contests it.

That means the heirs will have to make nice if they want to collect. No one who was mentioned in Sinatra's Last Will took advantage of the first opportunity to challenge it in court. A lawyer for the estate's executors credits a no-contest clause in the Last Will with being a "substantial deterrent" to any challenges.

"Anyone knows if they want to challenge the Last Will they better succeed because if they fail they are going to disinherit themselves completely," said lawyer Andrew Garb. The most contentious of the provisions in the Last Will is the issue of who may merchandise Frank’s name, a valuable asset since his brand name appears on a huge volume of merchandise.

The Last Will gives this asset to Frank’s fourth wife Barbara, whereas in the latter part of his life it was controlled by his daughter Tina. Frank obviously knew that this change in direction would cause even more friction between his families. It is significant that the bulk of Sinatra's net worth - between $200 and $600 million - was set aside in a living trust enacted before his death. The living trust has significant tax advantages for the beneficiaries.

Furthermore, unlike the Last Will, which is subject to a review in probate court and is therefore a public document, the contents of the living trust are confidential – also something Frank would like. It is known that the children received rights to most of their dad's lucrative music catalog. Ol' Blue Eyes also added $1million to a living trust fund established earlier for his two grandchildren.

Most of his estate had previously been put into a living trust, separate to the grandchildren's trust. In that fund, known as a living trust, Sinatra's children were given rights to much of the singer's music catalogue. Sinatra's attorney, Harvey Silbert said: "There are very substantial assets in the trust." Here are other provisions of the Last Will:

Barbara, his wife of 22 years, gets $3.5 million in assets, along with mansions in Beverly Hills and Malibu and a ranch near Palm Springs. She also receives rights to Sinatra's Trilogy recordings, most of his material possessions and control over his name and likeness. Frank Jr., Nancy and Tina get $200,000 in cash each, as well as stock. Their mother Nancy Barbato, Frank’s first wife, gets $250,000. Frank Jr. gets the rights to Frank Sr.’s sheet music.

Robert Marx, Barbara's son from her marriage to Zeppo Marx, gets $100,000. Sinatra's friends Elvina Joubert and Dorothy Uhlemann get $150,000 and $50,000, respectively. His best friend Jilly Rizzo was supposed to collect $100,000, but he died in 1992 and was removed from the Last Will Sinatra's attorney, Harvey Silbert, discounted earlier reports that the entertainer was leaving $150 million to Barbara Sinatra's Children Center, and there was no indication of such a donation in the Last Will.

Estate Planning and Living Trust

A living trust is an agreement in which one person (the grantor) transfers property to a second person (the trustee) for the benefit of a third person (the beneficiary).

A living trust allows the grantor to name either himself or some other person as trustee or co-trustee, reserves his right to revoke the trust at any time and return the property to himself, and lets the grantor control distribution of his estate to his beneficiary upon the grantor's death. A living trust is created while the grantor is alive, rather than upon his death under terms of his will.

A living trust lets you control the distribution of your estate. You simply transfer ownership of your property and your assets into the trust, then serve as its trustee or select a person or an institution to be its trustee.

With a living trust, the person you appoint to handle the trust after your death - the successor trustee - simply transfers ownership to the beneficiaries you named in the trust. Much of the time, this can be accomplished in a few weeks. When all of the property has been transferred to the beneficiaries, the living trust ceases to exist.