You should have a basic understanding of the estate administration process before you make any planning decisions. A lot of people are not aware of the fact that a will must be admitted to probate, which is a court supervised legal procedure.
In this post, we are going to share five things you should know about probate to help you make informed decisions.
The Executor Has Serious Responsibilities
When a will is used, the estate administrator is the executor. You name an executor when you draw up a will, and if you fail to do this, the court would appoint a personal representative to assume the role.
There are movie and television show scenes that depict an executor presiding over an informal “reading of the will” after a funeral. The inheritors sit and listen while the will is read aloud, and they leave with the understanding that they will receive their inheritances in short order.
This is nothing more or less than fiction. The will would be admitted to probate, and the court would provide supervision during the estate administration process.
The executor would not simply read a document and write a few checks. He or she would be required to complete many different tasks while probate is underway.
Inheritors would be notified, and the executor would notify the Social Security Administration. A notice would be posted for creditors, and all final debts would be paid, including taxes, so the executor would establish an estate bank account.
Assets that comprise the estate would be identified, inventoried, and prepared for distribution.
Along the way, the executor would be the point of contact for the heirs that will be receiving inheritances, so the administrator must have good communication skills.
As you can see, these are some considerable responsibilities, so the role of the executor is not a ceremonial honor. You should be practical when you choose your executor if you are going to use a will as your asset transfer vehicle.
Probate Is Time Consuming
You probably want your loved ones to receive their inheritances as soon as possible, but they will play a waiting game during probate if you use a will as the centerpiece of your plan.
It will typically take about eight months for probate to run its course if the situation is extremely simple and straightforward. No inheritances are distributed while the estate is being probated, so the time consumption is a major negative.
Probate Costs Eat Away at the Estate’s Value
The executor is entitled to payment, and in many instances, a probate lawyer and an accountant will be engaged. There will be a filing fee along with appraisal and liquidation costs. When all the red ink has been tabulated, the estate’s value will be reduced by 3 to 7 percent in most instances.
Privacy Is Lost During Probate
Most people like to keep their financial decisions private, and the inheritance planning decisions that you make are very personal. Probate is a public proceeding, so anyone that is interested can access the records to pry into your final affairs.
Probate Can Be Avoided
There is one positive thing we can say about probate: it can be avoided. If you use a revocable living trust to facilitate asset transfers, you would act as the trustee while you are alive and well.
You would have complete control of the resources, so you would not have to worry about a loss of access, and you would retain the right of revocation. In the trust declaration, you would name a successor trustee to act as the administrator after you are gone.
When the time comes, the trustee would distribute assets to the beneficiaries in accordance with your wishes, and the probate court would not be involved.
Make the Ideal Estate Planning Connection!
As you can see, there are many things to think about when you are planning your estate. We can gain an understanding of your situation, make recommendations, and apply our expertise to create a plan that ideally suits your needs.
If you are ready to get started, you can call us at 901-763-2500 or 866-997-6325 to schedule a consultation at our Memphis, TN estate planning office. There is also a contact form on this site you can fill out if you would prefer to send us a message.
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