Reasons to Avoid Probate
Avoiding probate saves time and money. Depending upon the complexity of the estate -- and amount of assets and debts involved -- beneficiaries might wait a long time before they receive their bequests while the will maneuvers through the legal process. The probate process also costs the estate money, and thereby diminishes the value of the gifts distributed to the beneficiaries. If the estate is small or relatively straightforward, spending money on court costs and attorneys’ fees might not make sense.
Reasons to Probate
Avoiding probate is not always desirable. If a will is probated, creditors of the estate must file their claims by the statutory deadline, which is often a much shorter time-period than the deadline if the will is not submitted for probate. Creditors’ that fail to file their claims by the deadline cannot collect debts from the estate or beneficiaries at a later date. Even for seemingly straightforward estates, the probate court can temper potential disputes between beneficiaries by lending legal authority to the distribution of assets. In some circumstances, probate can assuage concerns about the executor’s judicious, competent, honest handling of the estate. Some more complex estates might require the court oversight to ascertain the value of assets, liquidate or maintain specific assets, hire professionals or otherwise guide the process.
Lack of Assets
An estate with no assets can avoid probate. In some cases, a decedent’s lack of possessions at time of death occurs unintentionally. The Southern Illinois University at Carbondale Legal Clinic, SIUC, offers another scenario, however, in which a person transfers assets to children or other trusted family member. SIUC warns that transferring your property to other people can have unintended consequences that might leave you in difficult financial circumstances.
Joint Tenancy with Rights of Survivorship
Governed by tenancy law, joint tenancy offers advantages and disadvantages. All joint tenants have full rights of property ownership. Upon the death of one joint tenant, property interest passes automatically in its entirety to the other joint tenant or tenants. During the joint tenants’ lives, however, this type of ownership interest can cause unintended problems. For one, the property is subject to the claims of all joint tenants’ creditors. With regards to joint tenancy of a bank account, moreover, any joint tenant can withdraw the entire amount from the account.
A revocable trust, also called a living trust, is an instrument in which the grantor creates a trust that names an individual or entity as trustee. The grantor and trustee are often the same individuals. Because the trust retains ownership of property transferred into the trust, the decedent does not own the property at the time of death. Although this device can avoid probate, initially establishing a revocable trust costs money. Very specific rules govern the format for a revocable trust. If the instrument is not set up properly, the property will still be subject to probate.