Monday, June 26, 2006

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.

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