Avoiding probate: Is it worth it?


When you die, your estate goes through a process that manages, settles, and distributes your property according to the terms of your will. This process is governed by state law and is called probate. Probate proceedings fall under the jurisdiction of the probate court of the state in which you are domiciled at the time of your death. This court oversees probate of your personal property and any real estate that is located in that state. If you own property in a state other than the state in which you are domiciled at the time of your death, a separate “ancillary” probate proceeding may need to be initiated in the other state.

Why avoid probate?
Most wills have to be probated. The rules vary from state to state, but in Iowa, smaller estates are exempt from probate, or they may qualify for an expedited process.

Probate can be slow

Depending on where your executor probates your estate and the size of your probate estate, the probate process can take as little as three months or as long as three years.

Probate can be costly

Probate costs usually include court costs (filing fees, etc.) publication costs for legal notices, attorney’s fees, executor’s fees, bond premiums, and appraisal fees. Typically, the larger the estate, the greater the probate costs. However, if a smaller estate has complex issues associated with its administration or with distribution of its assets (e.g., if the person who died owned property in several states), probate can be quite costly.

Probate is a public process

Wills and any other documents submitted for probate become part of the public record — something to consider if you or your family members have privacy concerns.

Why choose to go through probate?
For most estates, there’s usually little reason to avoid probate. The actual time and costs involved are often modest, and it just doesn’t make sense to plan around it. There are also benefits to probate. Since the court supervises the process, you have some assurance that your wishes will be abided by, and if a family squabble should arise, the court can help settle it. Further, probate offers some protection against creditors. As part of the probate process, creditors are notified to make their claims against the estate in a timely matter, if they don’t it becomes much more difficult for them to make their claims later.

Some states require your will be probated before beneficiaries under your will can exercise certain rights.

How to avoid probate
An estate plan can be designed to limit the assets that pass through probate or to avoid probate altogether. Property may be passed outside of probate by owning property jointly with right of survivorship; by ensuring beneficiary designation forms are completed for those types of assets that allow them, such as IRAs, retirement plans, and life insurance (to avoid probate you shouldn’t name your estate as beneficiary); by putting property in a trust, and by making lifetime gifts.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016.

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