Estate Planning
The Pros & Cons of Probate
Probate is a judicial proceeding in which a judge supervises the distribution of a person’s assets after they pass.
In Idaho, probate is required if you own real estate (unless that real estate is placed in a Living Trust), or if you have assets worth over $100,000. Probate costs vary but typically range between $3,000 to $5,000. Probate takes a minimum of six months.
There are pros and cons to probate. In some circumstances, taking your estate through probate makes sense. However, for most people, probate is an unnecessary hassle and many people choose to avoid it all together by setting up a Revocable Living Trust.
Here are some of the pros and cons of probate:
Pros
Probate is a good place to resolve complex creditor issues. If you know that when you die there is a high likelihood that your estate will owe more money than you have, probate can be a good forum to sort out complex creditor issues. A judge will review each creditor’s claims and decide how to divide the assets amongst the various creditors. The judge’s decision is final, which ensures that there are no outstanding issues for your loved ones to resolve.
Probate may be a good option if you think there will be a dispute over how your assets are distributed when you die. As with the creditor claims, a judge will weigh each family member’s claims and once a decision is made, it is final. However, in our experience, a well-drafted estate plan that is communicated to your loved ones before your die significantly decreases the likelihood that your estate will be contested.
Probate ensures an orderly distribution of assets for people who don’t have an estate plan. If you don’t have an estate plan – i.e. a will or living trust stating your wishes for who inherits your assets –probate ensures that there is an orderly distribution of assets according to state “intestacy” laws.
Cons
Probate delays when your beneficiaries obtain their inheritance. Probate takes time and there are certain steps that must be followed before your beneficiaries receive their inheritance. Typically, your beneficiaries must wait six to nine months before they receive a distribution.
Probate is a public process. Your Personal Representative must file a copy of your Will and an inventory of everything you owned when you died. In some cases, they also must file a list of the people who receive your assets and how much they receive. This may not be information that you want to have made public.
Probate requires an attorney. Your loved ones must hire an attorney to help them with the process, which can be a challenge if they live out of state.
Probate can be costly. Your loved ones need to pay an attorney to assist them with probate. They will also have to pay certain court costs. Probate costs range from $3,000-$5,000. If you own real estate in more than one state, the probate costs can be extremely high.
Probate can be confusing and burdensome. Your Personal Representative must follow certain court procedures and fulfill certain requirements. Most Personal Representatives have not served in this role before and may find the process confusing or intimidating. Although working with a good attorney can do much to alleviate this stress, many people prefer to avoid probate all together.
Probate is a hassle. By requiring certain steps to be followed, the probate process creates delay and often causes frustration for your beneficiaries. It can be intimidating dealing with the court
If probate doesn’t sound appealing to you, the good news is that with a Revocable Living Trust, your estate can avoid probate all together.
With a Revocable Living Trust, your trustee distributes your assets pursuant to the terms you set without Court supervision and no public fillings. The only people who know the value of your estate are your beneficiaries, and, if you so choose, the beneficiaries may only know the amount they have inherited, and not the total value of your estate. Click here for more information about the benefits of having a Revocable Living Trust.
