When you plan your estate, you decide on the distribution of your assets, but this should not be the only consideration. Estate administration is another facet, and you should gain an understanding of the probate process before you make any decisions.
Court Supervision
If you use a will to state your final wishes, you will name an executor in the document to take care of the hands-on administration tasks after you are gone. The executor is not allowed to work independently without any type of government supervision.
Under the laws of the state of California, the will would be admitted to probate, and the court would supervise while the estate is being administered. There is a proving of the will, so the court will examine the document to determine its validity.
An estate challenge can be initiated while probate is underway. Acceptable grounds are improper execution, fraud, undue coercion, and the incapacitation of the testator.
Privacy, Time, and Money
The executor will inventory the assets and prepare them for distribution to the beneficiaries. Final debts will be paid during probate as well, so the executor will open a bank account on behalf of the estate. Creditors are given time to come forward, and this adds to the time consumption.
Probate is a public proceeding, so the general public can access the records to find out how the assets were distributed, and they can pry into other details. Remember, the media aired all of Michael Jackson’s personal details on television because his estate was in probate and completely public! Probate expenses include court costs, the executor’s payment, potential attorney and accounting fees, and appraisal and liquidation costs. Executor and attorney’s fees can run around a whopping 5% of the total gross probate estate!
In the best case scenario, an estate can be probated in about nine to twelve months if everything goes smoothly, but many cases are stalled in probate for two, three or more years. The original Anna Nicole Smith case is one that comes to mind, and this disputed estate was in probate for over 15 years. Michael Jackson’s probate has lasted over a dozen years.
This court also presides over intestacy matters. This is the condition that exists if someone passes away without any estate planning documents at all. They would appoint a personal representative to act as the administrator, and a similar process will unfold.
The probate court also handles adult conservatorship cases. When an incapacitated adult can no longer make sound decisions, the court can appoint a guardian to act on their behalf.
Probate Avoidance
As we have explained, probate is time-consuming, and the inheritors do not receive their bequests while the estate is being probated by the court. The loss of privacy is another drawback, and probate expenses reduce the value of the inheritances that will be received by the heirs.
A conservatorship is a necessary safeguard, but most people would rather choose their own representatives when they are fully capable of doing so.
If you plan your estate correctly, you can avoid probate and empower your own hand-picked decision-makers to act in the event of your incapacity. The first step is to establish a revocable living trust, and you would be the trustee while you are still alive.
As a result, you would maintain complete control of the assets of the trust. Your heirs would be the beneficiaries, and you would name a successor trustee to manage the trust after your passing. This person could also be given the power to administer the trust in the event of your incapacity.
After you are gone, the trustee would distribute assets to the beneficiaries in accordance with your wishes, and probate would not be a factor. In addition to the designation of a disability trustee, there are some additional steps to take to prepare for possible incapacity.
You can execute a durable power of attorney for property to name someone to manage property that is not held by a trust. A living will should be added to state your life support preferences, and you can name a medical decision-maker in a durable power of attorney for health care.
Schedule a Consultation!
Today is the day for action if you are going through life without an estate plan, and we can help you adjust your existing plan if revisions are necessary. You can reach our Burbank, CA estate planning office at 818-937-2335, and you can use our contact form to send us a message.
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