Probate and Probate Avoidance — Answers to Your Questions

You've probably heard of probate. But is it a good thing or a bad thing? The answer is both. But if you, like many Americans, aren't quite sure how probate even works, it's impossible to answer this question for yourself. Nor can you draft a plan for avoiding it if you need to. 

To help you maximize your estate for your surviving loved ones, learn some answers to your burning questions about probate and probate avoidance. 

What Is Probate?

Probate is the legal process in the United States to confirm the validity of a will after a person passes away. The probate court hears objections to wills and decides on issues raised in disputes about them. It also oversees management of the resulting estate until it's distributed to heirs and terminated.

In addition, probate creates a legal structure for the estate of someone who passes away without a will (known as dying intestate). The state's written rules determine how the estate is managed, its bills paid, and its assets distributed to next of kin.

Is Probate Bad?

Probate is not inherently bad. It serves an important purpose by creating a legal arena where will and estate disputes can be resolved. The management of estates with no will is vital because many Americans fail to do any estate planning.

However, even though it is necessary, probate has its downsides. It can take months or even years to move an estate completely through the probate process. In the meantime, your heirs may not have access to assets like money and property they need to pay for their expenses. Operating the estate during this time (as well as probate court itself) also costs money, which reduces your estate's assets. 

Then, there are privacy issues. Probate records are public records. Your estate's assets, value, and heirs may be viewable by anyone who cares to look for them. 

For example, consider a person who owns a small business on which their family relies. Their ownership of this business would become the estate's, managed by an executor or court-appointed representative for months or years. In the meantime, that business isn't transferred to their successor nor are its full assets available to support the family. And the business's finances are part of the public record. 

How Do You Avoid Probate?

There are some common ways to avoid probate if you choose to. One of the most important is through living trusts. You simply transfer ownership of one or more assets into a revocable trust with yourself as primary trustee. When you pass on, the successor trustee takes over and those assets do not pass through probate.

Revocable trusts aren't the only method, of course. Which tools you should use—including irrevocable trusts, transfer-on-death deeds, joint ownership, beneficiary designations, lifetime gifts, family foundations, and more—depend on your assets, goals, and estate size.

Can You Avoid Probate Entirely?

There is one important caveat when discussing probate avoidance. It may not be possible to avoid probate entirely. The reason? It's generally impossible to account for absolutely every little thing you own when using legal tools like trusts—especially over many years. Something is invariably left over, which may need to be distributed through a will. This is known as a pour-over will. 

Where Can You Start?

Now that you know a little more about probate and the reasons to avoid it, where should you start? Lifetime Estate can help. We work with residents throughout Colorado and beyond to understand probate, avoid it when possible, and navigate successfully when it's not. Call today to make an appointment or get more answers to your questions.