Last posted by Vera Gibbons | articleapp.com
When it comes to administering a descendant’s estate there’s a legal process called probate that oversees the settlement and distribution of the assets.
This process, which guides the legal acceptance of a will (if there is one) and appointment of an executor, essentially wraps up a person’s legal and financial affairs after their death.
Supervised by your state’s probate court, this is a formal practice that most Americans don’t want to talk about, let alone experience.
In fact, probate is something many try to avoid altogether (primarily by setting up trusts). After all, it is considered stressful and objectionable.
Probate Can Be Time Consuming
One of the biggest concerns is the amount of time probate takes. And this is a legitimate concern. Sure, many states have simplified or streamlined the process over the years, but the bottom line is that probate cases are generally a slow procedure — especially in big legal markets (like New York or Los Angeles), said attorney Hugh Drake, partner at Brown, Hay & Stephens, a full service law firm engaged in the representation of corporate and business entities, public institutions, and individuals in a diverse range of legal disciplines.
“It’s more formalistic in these markets. There are more restrictions and the courts are congested,” he said in an interview. “The scheduling — getting in and out of probate — is difficult.”
Regardless, you’re looking at a process that typically runs six to eight months, depending on your state and the size of your estate, as well as other factors such as the type of assets owned, form of ownership, tax issues, creditors’ claims, marital property issues, and whether a business is involved.
“Owning a sole proprietorship is a lot more complicated than owning stock in a business and if there are disputed matters that pertain to a sole proprietorship, you have to get permission from the judge to make decisions,” said Drake. “That can be onerous.”
Probate: Lengthy and Complex
The process, which often involves extensive paperwork and tedious tasks, can become even more cumbersome if family members disagree. For example, inheritors can file petitions over the handling of the estate or assets, or contest the will, or fight the validity of the will because they’re not named in it (when notified).
“Issues can and do crop up, particularly when someone isn’t happy with what they’re receiving or what they’re not receiving,” said attorney, Ilana Davidov, a founding partner at Davidov Law Group, an estate planning firm, in an email exchange.
One of the biggest drivers of conflict is the modern family, said Drake. “It’s usually children of the first marriage versus a surviving spouse – a stepmother or stepfather,” she said. “Without mom or dad as an intermediary, the gloves come off. It’s often more about the relationship than the money.”
“Litigation can kick around for years and everything is on hold until it gets resolved,” said Drake.
Privacy Concerns During Probate
Probate is a public process. Extensive documentation and paperwork eventually become a part of public records. This means that anyone can access and read court files and be privy to a deceased’s estate and the value, as well as the names and addresses of the beneficiaries.
This can result in unwanted attention from nosy neighbors, family members who feel the executor is hiding something from them, and even solicitation, said attorney Ray Prather, a partner at Prather Ebner, which focuses on trusts, estates, and exempt organizations.
Sometimes, the solicitations come from those with less than honorable intentions, added Davidof: “Who is it easiest to appeal to and who is most vulnerable? Someone coming into an inheritance who may not be able to manage it.”
Probate can be costly. What makes up the lion’s share of the costs? Attorney fees, said Drake. That’s usually an hourly fee (in a few states, lawyers charge a percentage of the gross value of the estate as their fee), and it adds up — particularly if there are multiple attorneys involved (as would be the case if there is, say, a vacation home in another state).
“This drives costs up rather quickly,” said Prather.
Beyond attorney fees, there are court costs, newspaper publication fees for publishing the estate appointments, appraisal fees, and other potential costs. And fees vary from state to state.
Tally it up and you can count on probate taking anywhere from $5,000-$10,000 of your assets away from your beneficiaries, said Prather. “For 80 percent to 90 percent of the population, this is what probate costs, on average,” he said.
This figure, which doesn’t include estate and income taxes that may be due and payable during the course of the probate administration, can cause family angst, particularly if it’s a parent who has died, said Prather.
“Family members feel they should have total ownership of this money; they all have their hand in the pot and think that it should all be theirs,” he said. “That’s just the way they see it.”