What is a Will?
A Will is a document which provides instructions as to how you want your assets, property, and possessions distributed to loved ones upon your death through the probate process. If you have minor children, this is where you name the guardian for them. Wills are very individualized document, and can be simple, or have complex planning provisions, depending on the person’s circumstance or situation.
What is Probate?
Death does not come to everyone in their bed, at the end of a long, happy life. No one ever wants to think about the fact that death can come at any time—and for good reason. Still, when it comes as an unexpected blow, the last thing anyone wants to deal with is a complicated legal procedure.
Unfortunately, that is exactly the situation that many people have to face when a loved one dies, and no plan, or will has been set in place. It is a common misconception that things like Estate Planning and drafting a will are only for the elderly; it is just as important, if not more so, for the young and healthy.
When you delve into the seemingly complex process of Estate Planning, one of the first, and most important words you will hear, is the term “probate.” To put it simply, probate is a court-supervised process. In probate, the property and assets of the “decedent,” or person who has died, are transferred over to their “distributes,” the people who are meant to receive said property and assets—whether that be heirs, creditors, charities, or others. This one of the reasons a will is essential.
Probate is a mandatory process—all property and assets must go through probate before it can be passed on to heirs. This is a long, complicated, public, and expensive process for the family of the deceased, spanning at least several months, if not years; all during an already difficult and mournful part of the family’s lives.
Once a person has died, their property is held and managed by a Personal Representative (PR). There is, of course, another complicated process in order to be named PR:
Hire an attorney to represent you.
The PR is responsible for distribution of the property, once all transactions are approved by the court. The earliest point at which an estate can be closed and distribution of property can begin is six months and ten days after the notice to creditors is published; usually, however, it takes over a year for the PR to accomplish all necessary tasks and to obtain the court’s approval. There are also several expenses involved in the probate process, all of which come out of the Estate before it can be passed on to the heirs of the deceased.
First, there are taxes. Before an estate can be closed and assets distributed, state and federal taxes must be paid—including death transfer taxes, and final income taxes, real estate and personal property taxes owed by the decedent.
Then, there are the court costs and attorney’s fees. Every estate pays court costs, the amount of which depending on the size of the estate, and the services the court provides. There are also fees and commissions to be paid to the PR and attorney—the amount again depends on the amount of money and personal property administered in the estate.
Fortunately, there are a few ways to minimize the time and expense involved in the process, or to avoid probate altogether.
First, there is the will. Though the will still must go through probate, there are several advantages to having one.
There are also several different types of Trusts. The biggest advantage of a trust is that trusts do not have to go through probate. Keep in mind, however, that trusts are not a substitute for a will; it’s still a good idea to have both.
Death is not something that anyone wants to plan for. It can be frightening—but it doesn’t have to be. Setting a plan in place now can greatly minimize the stress and hassle involved, allowing loved ones to mourn, and move on, rather than spending months or years reliving the loss as they deal with the complex legal process of probate.