People harbor some misconceptions about the commonly used estate planning document known as the simple will.
If you never looked into it, you may simply assume that you name an executor in the will, and you leave behind instructions. After you pass away, the executor will produce the will, read it to the relevant parties, and distribute the assets in accordance with your wishes.
When you make this assumption, it can seem as though a last will is the simplest, most efficient asset transfer device. In reality, the matter is much more difficult.
A will must be admitted to probate, and in New York, the Surrogate’s Court will supervise the administration of the estate. This legal process is in place to provide protections to creditors of the deceased individuals, and the oversight can be seen as something that is positive on some levels.
However, there are some serious drawbacks that can make things difficult for the rightful heirs. Let’s look at four reasons why you may want to consider a probate avoidance strategy.
During probate, interested parties can come forward to challenge the validity of the will. Granted, this can be a very useful protection when there is good cause for a will contest. On the other hand, if you definitely executed the will properly, and it reflects your wishes, probate can open the door for disgruntled parties to step in to try to muddy the waters.
Loss of Privacy
When famous people pass away, you sometimes read about the way that their assets were distributed. How is this possible? It would be logical to assume that these financial decisions would be kept confidential.
The reason why the general public can find out how assets were transferred is because probate is a public proceeding. Anyone who is interested can access probate records, so if you use a simple will, you are surrendering your privacy.
The process of probate is not free by any stretch of the imagination. Expenses include the executor’s remuneration along with legal fees, because a probate lawyer will often be engaged. Since final taxes must be paid, an accountant may be brought in as well, and this adds to the negative side of the ledger.
During probate, the executor will identify and inventory all of the property that comprises the estate. Appraisals and liquidations are typically going to be necessary, and there will be costs that go along with them.
When you add in the incidentals, you are looking at a relatively hefty chunk of the estate going down the drain during probate. This reduces the inheritances that will eventually be received by the heirs.
You would probably like your loved ones to receive their inheritances as quickly as possible after you pass away. Unfortunately, there is going to be a waiting game to play if you decide to use a will that must be admitted to probate.
Even if the case is completely uncomplicated, it will take eight months to a year, and contested or otherwise difficult cases can take considerably longer. No inheritances can be distributed by the executor until the estate has been probated and closed by the court.
Now that you know why you may want to avoid probate, you are naturally going to wonder how you can go about it. The most widely utilized probate avoidance tool is the revocable living trust. You do not surrender any control of the assets while you are living if you establish this type of trust, because you can act as the trustee and the beneficiary.
In the trust declaration, you designate a successor trustee to administer the trust after you are gone, and you name your heirs as successor beneficiaries. When the time comes, the trustee would be empowered to distribute assets to the beneficiaries in accordance with your wishes outside of the costly, expensive, and intrusive process of probate.
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