In recent columns, I have tried to take some of the mystery out of the “probate” process. In my last column, I explained why probate may be important even though it is not a process required by law.
I also stated that I would explain why some methods to avoid probate are extremely risky. To do that, I need to first address the motivation to avoid probate.
Some go to significant effort - and expense - to avoid probate. The most common reason I am given is its cost. However, probate need not be an expensive process at all. And despite what you may have heard, the cost of probate need not be based on the value of what you spent a life time accumulating.
Unfortunately, I am aware of people who spent twice what probate would have cost to obtain a trust they were told would help them avoid probate. I am certain they were never actually told what probate would cost; only that it was a cost they should avoid. And, as I will explain in a future column, they may have still have to go through probate!
I very much agree that people should avoid unnecessary expense. But proper estate planning should include a discussion about whether probate would even be necessary. If it would be necessary, that discussion should address the anticipated cost of probate and existence of effective alternatives. These are important issues a form from the Internet cannot help you address.
Last column, I gave examples when probate may or may not be necessary. The critical point is that these are issues that need to be addressed with the guidance of qualified professionals. The consequences of failing to do so can be significant. Even worse, it may be those you are attempting to protect that must face those consequences.
With that background, in my next column I will address two dangerous examples of probate avoidance I commonly see: Those who gift away assets during their lifetime and those who add other’s names to their property.
© 2016 Steven J Wright