Probate – Should You Avoid It When Possible
Probate is a legal process by which the court establishes the validity of a will; or if no Will, the heirs-at-law. The Court determines the value of the estate; resolves issues with payment of creditors, taxes, and other debts; disputes between the beneficiaries, and then orders distribution of the net assets. But it does have some drawbacks.
Probate is a public process, so financial privacy goes out the window. Probate also usually lasts 6-12 months, due to certain Statute of Limitations for bill collectors, possible court hearings and other court-related matters. And probate can be expensive. Attorney and executor fees can bill the Estate for work performed, and then there can be appraiser’s fees, court costs, among other expenses. However, thru this process there is a judge overseeing the process.
There are tools available to minimize (or eliminate) the need to probate an estate. You can designate certain assets to your beneficiaries as payable on death (POD), you can name beneficiaries on life insurance policies, IRAs, annuities, and retirement plans.
More complicated estates may benefit from a revocable or irrevocable trust, which after an initial setup fee allows you to manage the disposition of all your wealth in a single document, outside of the supervision of the Court in most instances, and may provide some tax benefits and protection from bill collectors. The caveat here is that who you designate as Successor Trustee upon your death for you trust(s), who will then distribute your assets, has enormous power and you need to be sure that they will only exercise that power for the “good” of your other chosen beneficiaries. And in this world of increasing “blended families” will there be harmonious relationship between the “steps” after your death? Sometimes the 2nd marriage couple are wise to appoint co-trustees, or co-executors, from each side of the fence.
And the worst thing you can do is to try to minimize costs by going it alone and downloading an “internet estate plan”, the consequences of which usually are faulty estate documents supposedly complaint with NH law, and are not, leading to expensive litigation costing 10X the costs of hiring and an experienced estate attorney up-front.