The Harsh Truth About The Probate Process!
Just about everyone who has SAVINGS, REAL ESTATE, or OTHER PROPERTIES needs an estate plan, regardless of the size of the estate. There are a number of ways one can plan his or her estate, one of which is via will.
In a basic will, you name an Executor who will be responsible for handling your final affairs. You will also name beneficiaries who will receive your assets after you die. There are many advantages and disadvantages associated with a will.
- Choice of Executor
- Distribution of property to chosen beneficiaries
- Transfer of property to charity
- Taking maximum advantage of marital deduction that allows spouses to transfer unlimited amount of assets to each other (during their lifetime or at death) with no tax on transfers
- Directing source of property to pay death taxes
- Designating guardian for minor children
- A will only controls the assets that are titled in testator's (decedent) name. It does not control assets that are titled in joint ownership and go to testator's spouse or another joint owner when he/she dies.
- A will does not control assets with beneficiary designations, like IRA, retirement benefits, life insurance policies or annuity contracts.
So, your basic will does not give you control over all of your assets. After you die, those assets you control will have to go through a court - controlled process called "probate".
What is Probate?
Probate is the legal process through which the court makes sure that, after you die, your will is valid, your debts are paid and your assets are distributed according to your will. Probate is the ONLY legal way to change the title on an asset when the person listed as the owner cannot sign his or her name; this process is NOT FREE. The cost of probate varies considerably depending on the size of the estate, the types of assets, the complexity of tax planning, and many other factors. Probate also TAKES TIME - the length of a probate varies by state law and other factors, but in general, it could take up to a year or longer. As for PRIVACY, the probate process - not your family has control over how your will is interpreted, how much probate will cost, how long it will take and what information is made public. Once a will is filed with the Court, it becomes a part of the PUBLIC RECORDS and anyone has access to those records. This means that the size and makeup of your estate and the amount each beneficiary receives is public. A will cannot be of any help if you become INCAPACITATED, because a will only goes into effect after you die. If you can't conduct business due to mental or physical incapacity (i.e. Alzheimer's disease, Stroke, or Heart Attack) only a court-appointee can sign for you, even if you have a will. Having the court involved can be expensive and time consuming. If you have MINOR CHILDREN or GRANDCHILDREN and you have a simple will, it may not give you the control you want - that's because the court (not the guardian you name in your will) will control the child's inheritance until the child reaches legal age. At that time, the child will receive the full inheritance. This is not what most parents and grandparents would want.
Contesting a Will
After a will is admitted to probate, any interested party may file an action to contest the will's validity. There are six grounds on which a will may be contested.
Improper Execution - If the will is not properly executed and some elements essential to its validity are missing. Example, the will was not witnessed or signed by a witness.
Legally Competent - It may be claimed that the testator was not legally competent to make a will at the time of execution.
Duress and Coercion - Being under duress or Influenced by others to make the will.
Fraud – If someone defrauded the decedent into making a particular will by outright lies or otherwise misleading him or her.
Forgery - If the will is or alleged to be a forgery.
A Revoked Will - The will that was admitted to probate had been revoked by the testator before death.
Conclusion - While a will is a useful instrument of Estate Planning in many instances, it may not be the ideal solution for all individuals and all circumstances. Each case needs to be analyzed individually to determine the type and appropriateness of the will being executed. Through the use of life insurance and annuities, settling the costs of the decedent’s estate, may significantly be reduced. When purchased and set up appropriately, life insurance and annuities by-pass probate and all costs associated with it. Not to mention that they save time since the proceeds are paid to the beneficiaries quickly and without delay. Other instruments such as a Trust should also be considered in lieu of or in conjunction with a will in certain situations.
Our content is created for educational purposes only. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Vantis Life encourages individuals to seek advice from their own investment or tax advisor or legal counsel.