Inheriting assets from a loved one isn't as simple as many think. The process of transferring ownership can take years and cost thousands of dollars. A recent article from MarketWatch sheds light on this complex process which you can read here.
The Probate Process Explained
Probate is the legal process after someone passes away to validate their will and distribute their assets. Without a will, state laws determine distribution. Here’s what's involved:
Filing the Original Will: The executor or personal representative named in the will must file the original with the probate court along with several additional probate documents that must be properly completed and filed to submit a copy of the will, accruing more court fees and attorney fees.
Notifying Heirs and Creditors: The court must notify all relevant interested parties, which can be time-consuming and cause potential issues, especially in cases of estrangement.
Inventorying the Estate: All assets and liabilities must be identified and appraised.
Paying Debts and Taxes: Outstanding debts, creditor claims, and taxes must be settled before any assets can be distributed to the heirs.
Distributing the Assets: Once all debts and taxes are paid, the remaining assets are distributed to the beneficiaries.
Why Does Probate Take So Long?
Several factors contribute to the lengthy probate process:
Court Delays: Courts can be backlogged, leading to significant delays. Paperwork may be submitted incorrectly resulting in rejection by the court.
Complex Estates: Estates with numerous or complex assets can take longer to inventory and appraise, especially those involving multiple real estate properties or business interests.
Disputes: Legal disputes among beneficiaries, disinherited persons, or creditors can prolong the process.
Outstanding Debts: Settling debts and taxes can also add time to the process.
Avoiding Probate
Many seek to avoid the entire probate process due to its time and costs. Successful; strategies often include:
Revocable Living Trusts: Assets in a trust skip the probate process and can often go directly to the trust beneficiaries.
Assignments: personal property including vehicles of all types, jewelry, tools, equipment, household goods, manufactured homes, business interests, oil/mineral royalty interests, timeshares, and even pets, etc.
Lady Bird Deed (Enhanced Life Estate Deed): Real Property ownership remains in your name during your lifetime, passing directly to the named beneficiary upon death. This is especially effective when used in conjunction with a trust. Care should be taken when attempting to utilize this type of deed.
Beneficiary Designations: Designating beneficiaries for accounts like life insurance and retirement accounts can also avoid probate. Again, care should be taken with specific strategies if not used with a trust. Without specific planning, people can inadvertently disinherit children and grandchildren when relying solely on beneficiary designations.
Given the time and costs associated with probate, many people seek ways to avoid it. The three strategies mentioned above, used in combination, can effectively bypass almost all forms of the probate court process. However, to cover all bases, it is crucial to also have specific Powers of Attorney: one for financial and property matters, and another for medical decisions. Without these documents, if you become incapacitated, probate proceedings may become necessary to appoint a conservator or guardian before any medical decisions can be made or bills paid. Such proceedings, while necessary in those circumstances, can be time-consuming, costly, public, and prone to significant disputes and delays.
Why Estate Planning Matters
Estate planning is crucial to ensure that your assets are distributed according to your wishes with minimal hassle and expense for your loved ones. At Abraham Law, we specialize in helping clients navigate the complexities of estate planning and probate. Our experienced attorneys can guide you through creating a comprehensive plan that meets your needs and protects your family.
With over 30 years of experience, Michigan Estate Planning Attorney Matthew J. Abraham and Abraham Law offer exceptional legal representation. Schedule a free initial consultation to address your estate planning or probate concerns today.
Visit our website https://www.abrahampc.com/estate-planning-probate-wills-trusts-powers-of-attorney or call 810-750-0440 for more information!
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