So I’ve been told many times I should have a will and do other things so my heirs can avoid probate. Why? What’s so awful about probate?
California resident
Not quite.
Probate is the court process of enforcing the will. So if you have a will you are going to subject it to probate, not avoid it.
Why avoid probate? Because any court case takes a long time (months, at minimum) and cost money (court costs, at minimum).
Whereas you can create things, like Trusts or certain types of deeds, which automatically transfer control of assets without having to go to court. That’s the stuff that avoids probate.
A will in probate can also be contested, creating further delays and costs. While irrevocable trusts aren’t completely bulletproof (and require that the trustee is honest and reliable in managing and distributing assets held in trust) they are not subject to the same legal challenges by would-be inheritors and are not required to be executed in full view of the public. If you have significant assets that you want to transfer to someone with minimal delay, it makes a lot of sense to establish a trust.
Stranger
Here’s a will / probate adjacent question…
A couple of years ago I filled out “payable on death” forms at my banks with my brother as the beneficiary. As I understood it, if I forget to wake up some morning the money in my accounts supposedly goes to the Llama sibling. No muss, no fuss and no will or probate. I realize there are probably 50 different state laws on this sort of thing, but can anyone say how reliable it really is in general?
[Scroll down to “Assets That Don’t Need to Go Through Probate”]
Stranger
My parents had both a will and a trust, and I never had to submit the wills for probate because most all of their assets were in the trust. The personal property that was in the will was simply split up between myself and my siblings amicably. One vehicle that was not in the trust was disposed of by a simple process at the DMV.
The best explanation I heard is that probate is for when you need the dead person to sign something, in which case the state does the signing for them. Trusts or transfer on death accounts avoid this.
Oh, and for @squeegee, I believe that probate in California is particularly onerous. Maybe some Californian dopers can correct me, but that’s my understanding. My wife and I own a vacation property in CA. In our will one of her nephews is the contingent beneficiary, and he is aware that he will need to go through a California probate if it ever comes down to it. He’s fine with that and the cost it will entail, he’ll come out way ahead anyway. The lawyer who created our wills did point out that in his experience California probate is not pleasant.
I think what you (or rather, your heirs) would really want to avoid is intestacy. Maybe. Whether it’s really a problem or not would depend on whether and how many intestate heirs you have and what you want to happen to your property when you die.
For example, I recently spoke with an older gentleman whose mother died a couple months ago. He has been long term disabled/unemployed, living in his mother’s house, and wanted to figure out how he was supposed to pay property taxes on it.
Come to find out, although he has been living in the house and his siblings are supposedly okay with him keeping it, well, that right there is kind of the problem. He has living siblings. Worse yet, he has dead siblings who have surviving children of their own. Forget about who pays property taxes on the house: he only actually owns a fraction of it, and since his mother didn’t have much else in her name, that’s pretty much the entire estate. Legally, they are entitled to either be reimbursed for their share of the home’s value (which he can’t do) or else may be able to force its sale to get their share, which would put him out on his ass.
Had his mother, knowing his dire situation and his need to continue living in it, left the home to him in her will, or had some kind of transfer on death deed, this wouldn’t have been an issue. But now, he’s got to figure how to (hopefully) get all his siblings to agree to either give up their share of the home or at least agree to grant him the use of it and not to sell, and get the surviving children of his deceased siblings to agree to the same (or, perhaps, their legal guardians depending on how old they are).
A giant mess. All for want of… something other than intestacy.
By contrast, when I die, as things currently stand, a will wouldn’t accomplish anything that intestacy wouldn’t. The assets would all end up in the same hands regardless (based on the will I would write, if I were inclined to write one). So as neat as it would be to take advantage of my state’s holographic will provision, it wouldn’t really be worth my time to do so.
Not your attorney, not legal advice, not licensed to practice law in California.
I was Executor for my mother’s Will in Virginia and at least here, you are correct. My nephew was named on a CD my mother had as TOD (transfer on death) and this aspect of her Estate completely avoided Probate.
Others have mentioned the cost of probate and for my mother’s Estate, this was about $900. Add to that, the record-keeping covering an itemization of all assets along with every credit and debit from the date of death until all obligations of the Will have been satisfied. It was a task involving many hours over the course of a year.
There is a problem with trusts, though. I have a 94 year old colleague who still cannot get his inheritance that his parents left him. They didn’t trust him. He was alcoholic, although he hasn’t had a drink in decades and they set up a trust with his then wife as trustee. He has long since divorced her, but she won’t allow him access to the money.
Actually, there’s a problem with failing to plan for contingencies. Wills or trusts can backfire when they assume facts no longer in existence. Such as now-ex spouses who hate your guts.
All of this speaks to having professional advice and doing things in a professional fashion. The single largest transaction most of us will ever make is dying. It pays to plan that one well.
All of this is doubly important if one of your goals is to have what had been your money managed for the benefit of somebody who can’t manage that themselves. Whether because of mental incapacity, youth or extreme old age, addiction problems, etc.
At least under US law, if the trust was written properly, the 94 yo colleague could sue the ex-wife for failing to perform the duties of trustee as written. Which require her to consider his needs first, last, and only, and hers not at all.
The mere existence of a will, and the filing it with the appropriate government office, does not necessarily open a probate, does it?
No, filing of the will with the county recorder does not trigger probate. Probate is a manual step that someone (typically the executor or an heir) instigates in the county probate court after a person dies. Probate is the legal process to manage the estate of a deceased person.
Whether or not you have a will doesn’t really affect if your estate goes through probate. Typically, all estates will go through probate. But what you can do is take some steps so that certain assets don’t go through probate. One reason is to simplify the task of the executor. The fewer assets they have to deal with, the easier it will be. The other is to avoid creditors claiming rights to the assets to pay off unsecured debts.
For instance, bank accounts can typically have beneficiaries specified. If there is not a beneficiary, then the balance in the account is part of the estate. If the estate has debt, then the bank balance (and other estate assets) will be used to first pay off the debts of the estate. After all the debts have been paid, the remaining assets are distributed to the heirs. But if a beneficiary is specified on the bank account, then the account balance transfers to the beneficiary. The account balance is not part of the estate and does not need to be used to pay off debts. The beneficiary gets 100% of the account balance.
Having a will and doing other estate planning things can simplify your probate, not eliminate probate. The more you can do to have assets transfer outside of probate, the easier it will be for your executor. And many families get torn apart from disagreements about how an estate should be distributed. You can help lessen those kinds of troubles by having a will that spells out how you want your estate to be distributed. Otherwise, your heirs may squabble over who gets what and end up with long lasting ill feelings towards each other.
After years of nagging by a friend I finally wrote a will. I am widowed, with no children, so there’s nobody in direct line for my estate. I think under NC law my estate would would be divided among my siblings, which would be a mess because they’re all in the Chicago area. So after a brief conversation with my siblings who were all of the unanimous opinion that “it’s your stuff, do what you want with it, we don’t care” I went to Nolo and had a will prepared. A local friend is both my executor and prime beneficiary, which I verified is legal.
This will vary with the jurisdiction and the manner of the arrangements. In some jurisdictions, the timing of this sort of arrangement may count as a fraudulent preference, on the basis that an individual cannot avoid their lawful debts by giving assets to another family member.
Not meant as legal advice, just a very general comment. As always, consult a lawyer in your jurisdiction to assist with estate planning.
Gotta be careful with terminology here.
Writing a will does not create a probate.
In some areas of the country it is common to have a newly written will recorded by the county recorder as a form of safekeeping. And to establish beyond dispute when that will was created. In other parts of the country this recording practice is all but unheard of. As an example of one, I’ve had umpteen professionally-created wills over my life. Zero of which have ever been recorded anywhere in the several states I’ve lived in.
A probate opens when the will-maker is dead, and somebody makes a court filing requesting to be named the executor / administrator / personal representative of the estate. Terms vary from state to state. The court accepting that filing and issuing so-called “letters testamentary” is what creates the estate, creates the probate, and names the executor(s). Note that the decedent having a will at all isn’t necessary for this. If somebody is dead, then somebody will step up to clean up the mess, even if it’s a government bureaucrat of last resort. But better it be family or friend or neighbor.
In some states probate can be waived, or nearly so if the estate is of a small enough dollar value. Which obviously opens the doors to some abuse. When / where that can be done it amounts to filing a document with the court saying in effect “Joe is dead. I’m his executor. He doesn’t have shit for assets, and I’ve distributed all of them according to law. So the estate is over almost before it began.” To which the the judge adds “Sounds good to me.” and signs an order creating and destroying the estate in one fell swoop.
So when folks say they “want to avoid probate”, what they really mean is “We want to ensure that almost all of the decedent’s assets don’t get wrapped up in the slow/expensive probate process and (somehow) take the fast lane around probate directly & quickly into the appropriate survivor(s)’ pocket(s). Leaving just a pittance to be processed through the inevitable probate process. Which itself will be all the simpler and faster the less assets are included within it.”
Joint ownership, POD/TOD designations and deeds, various kinds of trusts, etc. are all valid legal forms of that “(somehow)” in the previous paragraph.
What’s best for any individual or couple depends on how wealthy they are or aren’t. But anyone of upper-middle class SES & assets ought to have this all planned out. The mega-rich really need this stuff but the ordinary “mass affluent” folks need it too. If you’re single living in rented accompdations and the only thing you own is a 20yo Toyota, some thrift store furniture, and $100 in your checking account, offset by $1000 on your credit card, eh, you can skip it. The rest of us need to at least think hard about this shit and ideally engage a pro to do it right. Because do-overs are impossible.
Yeah, the terminology can be tricky, and I confess I am no kind of expert in stiffs and gifts (what we called Estate Law in law school.)
My understanding is that a will does not need to be probated if no one contests the distribution of assets. In a simple will, where sole surviving parent names one kid as executor and devises all property in equal shares to however many kids per stirpes, unless one kid is an asshole or the executor a crook, the property can generally be distributed without opening a probate action. (Yeah, some property might be titled in a manner such that court authority is needed. But I’m talking about simple, straightforward estates.).
We have a will, but we also have all of our financial assets PoD, our kids are successor beneficiaries to everything, and our house is in trust, w/ ou rkids as beneficiaries. The only property not in trust is our 2 cars (a minor portion of our likely estate) and if/when we replace those, the titles will be taken by the trust. So I don’t anticipate any need for a probate action after we die.
In my jurisdiction - Ontario - you can get something called a Small Estate Certificate is the total value of the estate is under CAD$50,000 which essentially bypasses the full probate process. Otherwise every estate goes through probate regardless of who the beneficiaries are.
I realize @Dinsdale is an attorney and I am not. OTOH, my late wife was an attorney who specialized in wills & trusts & practiced in 3 states. So I’ve picked up a lot over the decades over dinner with her.
IMO / IME @FinsToTheLeft covered the situation I mentioned of the de minimis estate. There’s still a court action but it’s simplified and mostly open & shut.
For an estate larger than the max for the simplified procedure or in jurisdictions where there is no simplified process, there will be a probate. Whether there’s a dispute as to the will or the distribution or not.
The most minimal “full” probate involves the issuance of the original letters test, an annual accounting of the distribution process if it takes that long, and a final accounting & request to close the estate as completed. All of which are simple motions. So minimum case is 2 motions less than a year apart. But it’s still a probate.
If the estranged weird sister wants to sue the estate / executor over [whatever] she can grow the probate into a veritable Jarndice v. Jarndice.
Some states, such as Florida where I live have terminated their simplified estate option. Too much fraud.
Also, ref @Dinsdale’s sound (and typical) POD-based estate plan, it’d be real easy for a comfortable upper middle class couple with two nice fairly new cars to have enough estate value right there to blow out the top of their state’s de minimis statute.
Some few states permit making a TOD designation on a vehicle title. It’s a growing trend, and IMO a good one. Precisely because cars are expensive and are the single largest chunk of value that nearly everybody owns but nobody can TOD unless statute provides. So one heck of a lot of full probates are about a car or two & a bunch of furniture where if the cars could be excluded the remainder could fall under the de minimis statute.
I don’t know the details of the trust. All this took place in California before he came to Montreal. She did screw in a different way. He had been a prof. at UCLA and had a pension plan there to which she was legally entitled to half. But she chose to start taking it when he hit 60 and the pension accountants refused to let him wait till, say, 70 to take his half. So he has been getting actuarily reduced pension payments for 34 years as a result. Of course, that is not her fault, but he was screwed.