Almost everyone we meet with for estate planning comes to us wanting to avoid Probate. Some of those people have been through the process with the estate of a loved one. Their experience in the Probate process gave them the background to understand that they want to keep their own estate out of Probate. Other people have no prior experience in probate, but they've been told that they should avoid Probate. This article gives more of an explanation on the Probate process and why you should avoid it.
There are generally four main reasons why people want to avoid probate (we call them “The Pitfalls of Probate”)
1.) Expense – Probate can be a very expensive process. The legal fees to be charged are based upon the value of the assets in the probate estate, and start around 4% of the first $100,000 of probate assets (that's a $4,000 fee on a $100,000 estate). Take a look at the Lucas County, Ohio Probate Court Computation of Attorney Fees form and the Wood County Probate Court attorney fee computation form for examples of how the fee is calculated.
2.) Privacy (Lack of) – Probate is a public process, so any person can look at the information in a deceased person's probate court file. This may not seem like a big deal, until you realize what information is there:
• Names and addresses of the relatives of the decedent, as well as any other named beneficiaries, plus the birthdates of any relatives or beneficiaries who are minors. • Specific information on all assets owned by the decedent, including account numbers and balances and appraised values of assets like real estate and cars. • Detailed information on how the estate was distributed – including who got what and how much.
3.) Protections (Lack of) – The probate process is designed to have a person's estate be administered and then closed as soon as possible. Assets are distributed from the probate estate to the beneficiaries from the probate estate, and from that point the beneficiaries are “on their own” to make good decisions about how to invest, save and spend the assets. If there are special circumstances, such as a beneficiary with creditor problems, or one who is a spender, or one who is just inexperienced or too young to handle an inheritance, the probate process does not allow for the inheritance to be given to them in a way that will protect them.
4.) Multiple Probates – If you have property in states other than Ohio (such as a cottage in Michigan or a condo in Florida), you would have to have a probate proceeding in Ohio, and then have another probate in the other state as well. Also, if you have beneficiaries under age 18, then your assets would pass through your probate estate into a Guardianship for them (another probate proceeding – see Avoiding a Guardianship of the Estate).
When people have more information on probate, they generally look for ways to design their estate plan to keep their estates out of probate. For most people, a Living Trust is the best and most effective way to avoid probate.