My clients know that I am a big proponent of revocable living trusts. Having handled hundreds of probate matters over the last 25 years, I am all too familiar with the problems associated with probate proceedings, whether the decedent had a will or not. Here’s a quick summary of the main reasons to avoid the probate process:
- Court Fees. Probate fees are 4/10 of 1% of the value of probate assets, with a maximum of $6,000. It’s easy to dismiss this cost while thinking about estate planning and the difference of a will versus a living trust, but it’s not pleasant for your family to write the Clerk of Court a check for several thousand dollars after their loved one has passed away.
- Attorneys’ Fees. Attorney’s fees are higher in probate because of all of the court requirements: these include the initial Application, Notice to Creditors, Inventory, Accountings, and more. Your family could end up paying a few thousand dollars more to an attorney if you have a will instead of a properly funded living trust.
- Bond. Most wills contain a waiver of bond provision, which is designed to save time and money (the bond premium). However, many courts are requiring bond even if waived, particularly for an out-of-state executor. Also, if your named executor has a spotty financial history, it may be impossible to obtain bond. If this is the case, an attorney may need to serve as executor, which will be an additional expense.
- No Privacy. Once filed with the court, a Will is public record, as are the Inventory of Assets and names and addresses of beneficiaries. This could allow unscrupulous persons to try to take advantage of young or otherwise vulnerable beneficiaries. Do you really want your estate plan open to the public eye? With a living trust, all of this information remains private.
- Time. Probate takes time. The period for creditors to file claims remains open for three months and preparing the required accounting can be a lengthy process. Plus, the Clerk of Court may not get around to reviewing the accounting for weeks after it’s filed. Attorneys’ fees must also be approved by the court, and that can take months. With a living trust, no court approval of any kind is required.
While joint ownership and beneficiary designations can be used to avoid probate, those methods are often problematic and do not provide the flexibility and protection offered by a living trust. A properly funded living trust is far and away the best way to avoid probate.