So, You Want to Avoid Probate?

Right behind, “all I want is a simple will,” the second-most common thing we hear from our estate planning clients is, “I really want to avoid probate.” Now, while there are a number of good reasons a person might want to avoid - or minimize - probate, clients often over-estimate the drawbacks, and underestimate the benefits of the process. In this article, we’ll ask the question, “What does avoiding probate actually do for you, and what are some of the drawbacks?”

What is Probate, Anyway?

Many of our clients come to us with the idea that probate means a court gets to decide who gets all their things when they die. While this is true, in a very general sense, it’s not as though a judge who has never met them gets to make all the decisions. Instead, it depends on whether a person dies “intestate” (i.e. without a will). If a person dies intestate, then it’s the Minnesota Legislature - who has also never met them - who gets to make those decisions through a series of default rules called the intestate succession statutes. If a person dies with a will, on the other hand, it is the will that controls how their estate is settled.

With even that very basic breakdown in mind, it doesn’t take much analysis to see the benefit of at least having a will to guide the probate process.

What are the Benefits of Avoiding Probate?

The most tangible benefit of avoiding probate is usually cost savings. Opening a probate costs money. Hiring an attorney to help with the probate costs money. Paying appraisers to determine the value of assets costs money. You get the picture. On the other hand, if we can avoid sending assets through probate, many of these costs can be avoided - or at least minimized - as well. With costs of probate ranging from 3-5% of the gross value of the estate, depending on who you ask, this can be a substantial cost savings even on a relatively modest estate.

Beyond costs, probate can also be a headache for your family. The last thing grieving family members want to do is hire an attorney, appear in court, fill out a bunch of paperwork, etc. Then comes the waiting. A typical probate proceeding can take 6-12 months to complete, and can be even longer if there are complications. Avoiding probate typically results in a faster process which doesn’t need to wait for court approval, and involves less headache because much of the work has already been done.

Finally, probate is a public proceeding. Filing a probate action necessarily requires public disclosure of a deceased person’s assets, debts, will, and other personal information. While not a concern for everyone, some people simply prefer to keep their affairs private, and avoiding probate can go a long way toward achieving that goal.

What are the Drawbacks of Avoiding Probate?

Despite all the benefits of avoiding probate, there are also some drawbacks to doing so.

One of the main drawbacks of avoiding probate is that a probate proceeding gives us access to a judge to resolve disputes. While most probates are pretty straightforward, there are instances where family members disagree about the validity of a will, or who should be appointed the personal representative, and sometimes there are disputes about the validity of a debt asserted by a creditor of the estate. Thus, if we anticipate having disputes, it may be best to utilize the probate process to resolve them.

Another benefit of probate, which is lost if we avoid it, is that the nature of the process brings a degree of certainty with it. Beginning the probate process triggers certain deadlines for creditors to make claims, which forces them to “speak now, or forever hold their peace.” Additionally, depending on the level of court supervision applicable to a proceeding, there can be a degree of oversight in approval of distributions, and the process ends with an order of the court - adding a level of finality to the process.

Finally, because probate actions are public proceedings, they often involve a greater degree of transparency than other options. Probate proceedings typically require the preparation of inventories, accounts, proposed distributions, etc. This level of transparency can go a long way in preventing the type of conflicts and disputes discussed above, since many conflicts are based on the perception that something inappropriate is happening, rather than something inappropriate actually happening.

So, What Should I Do?

This is both the simplest and most complicated question of all. It is complicated in the sense that determining which path is best for you will require a comprehensive look at your assets, beneficiaries, creditors, intentions, etc. before any competent recommendation can be made. It is simple in the sense that your next step is easy: Contact us today. We’ll guide you through the process of figuring out what your plan should look like, getting it set up, and answering any questions you have along the way.