For many, estate planning often comes with a primary objective: “avoid probate.” This goal arises from various sources, including advertisements, seminars, books, articles, and personal experiences that emphasize the perceived drawbacks of probate administration. But what does probate really entail, and how can it be managed or avoided effectively?
What Is Probate?
Probate is a court-supervised process that validates or invalidates a decedent’s will. More broadly, probate involves collecting and inventorying the estate assets, settling creditors’ claims, and distributing the decedent’s assets according to the terms of the will or the laws of intestate succession if there is no will. This comprehensive administration is often synonymous with the “administration of a decedent’s estate.”
Advantages of Probate
1. Close Judicial Supervision
Probate offers the advantage of close judicial oversight, ensuring assets are properly conserved and distributed to rightful heirs. Specific procedures and notices protect the validity of the will and the rights of the interested parties, providing a structured dispute resolution process through the court.
2. Treatment of Creditors’ Claims
Probate provides a straightforward process for handling creditors’ claims. Typically, claims must be filed within four months of the issuance of letters. This statutory period helps expedite the resolution of claims and ensures that late claims are generally barred unless special circumstances apply.
3. Tax Treatment
Probate and probate avoidance techniques have different implications for estate and income tax. While avoiding probate does not directly save estate taxes, understanding the distinctions between “probate estate” and “taxable estate” is crucial. Estate planners should note that both estates and trusts have specific tax reporting requirements and advantages to consider during planning.
Disadvantages of Probate
1. Cost
Probate can be expensive. The costs often exceed those of non-probate transfers due to statutory compensation for the personal representative and the attorney based on a percentage of the estate’s value. These fees can add up, especially in larger estates, though they are tax-deductible.
2. Delay
Probate can be time-consuming, often taking months or years to complete. The formalities involved, including notifying creditors and ensuring all claims are settled, can significantly delay the distribution of assets.
3. Publicity
Probate is a public process, and all documents filed, including the will and inventory of estate assets, are accessible to the public. This transparency can lead to unwanted publicity for the decedent’s family and heirs.
How To Avoid Probate
There are several estate planning tools to help avoid probate, including:
- Inter vivos trusts (both revocable and irrevocable)
- Joint tenancies
- Life insurance policies
- Multiple-party accounts
- Lifetime gifts
Deciding which tools to use requires careful consideration of your unique circumstances and goals. An experienced probate attorney can determine whether voiding probate is the best option and if so, evaluate and compare the advantages of each probate avoidance tool.
Talk to Our Experienced Probate Attorney in Orange County
Whether to plan for probate or probate avoidance depends on your circumstances. While probate offers structured judicial oversight and a clear process for handling creditors’ claims, it can be costly, time-consuming, and public. Implementing probate avoidance techniques can streamline the transfer of assets, reduce costs, and maintain privacy, but they require careful planning and consideration of potential tax implications. In any event, working with the estate planning attorneys at OC Trial Group can help ensure a smooth and efficient transfer of assets. Contact us today to explore your options.
OC Trial Group, APC, are top-rated attorneys based in Orange County, with offices in Newport Beach and San Juan Capistrano. We also serve clients throughout California, including Westminster, Tustin, Irvine, Buena Park, Laguna Hills, Fullerton, Newport Beach, Fountain Valley, San Juan Capistrano, Costa Mesa, Garden Grove, Stanton, Cypress, Anaheim, Mission Viejo, Laguna Niguel, Brea, and Dana Point.