CAN PROBATE
BE AVOIDED? An In-Depth Look at Probate – What Is Probate, Why Many People Choose to Avoid It, What are the Different Probate Avoidance Tools Commonly Used in the Field of Estate Planning
MARK O. COSTLEY DURHAM NORTH CAROLINA ESTATE PLANNING ATTORNEY
When you don't know much about estate planning, you may simply assume that you will be using a last will to record your final wishes. You may go forward with the impression that your family will pass around this document after you die, and everything will take care of itself. In reality things are not this simple. When you retain personal possession of your property until the time of your death it becomes probate property. Probate is a legal process. When you pass away using a will to state your final wishes, the executor that you choose when you create the will must admit the will to probate. The probate court determines if the will is actually valid. Anyone who wanted to contest the will could come forward and present an argument before the probate court. It is quite possible if not likely that you will have some debts outstanding when you pass away. If this is the case, creditors must be informed of your passing. Probate allows a window of opportunity for creditors to come forward seeking satisfaction. The executor may have many tasks to complete during the probate process. In addition to paying final debts, including taxes, the executor must secure and inventory the assets. They must then be prepared for distribution to the heirs. During the probate process the executor may need various types of paid
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professional assistance. A probate attorney is often going to be required, because there are legal matters to attend to. An accountant may be necessary, and property appraisers and liquidators may be called in as well. There are court filing fees, and the executor is entitled to payment. Because of all of these costs, probate can be expensive. Probate is a public proceeding. The things that take place during probate are a matter of public record. As a result, anyone who is interested could access probate records to find out what went on during the process. This loss of privacy is not especially appealing to many individuals. Probate can be time-consuming. The exact duration of a given probate proceeding is going to vary depending on the circumstances of the case in question. At minimum it will take several months. Complicated cases can be hung up in probate for years. The time consumption can be vexing for the heirs to the estate, because no inheritances will be forthcoming until the estate has been probated and closed.
WHAT CAN YOU DO? Now that you have heard about some of the drawbacks that go along with the
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probate process, you may wonder if probate can be avoided. The answer is yes, there are multiple different probate avoidance tools that are routinely used in the field of estate planning. Some of the methods that can be used seem simple on the surface, but they can present problems later on. One of them is the utilization of joint tenancy with right of survivorship. This sounds like something that is rather complicated. In fact, joint tenancy is simply the addition of a co-owner to the title of your property. If you add a joint tenant to the title of property that you own, this individual would assume sole ownership of the property after you die. The transfer would take place outside of the process of probate. This may sound like a straightforward and effective solution. However, there are difficulties with joint tenancy that can arise. Once you add a joint tenant to the title of the property, he or she is an equal owner of this property. As such, you can't do anything with it unless the joint tenant agrees. If you wanted to sell the property and move on with your life you would need the approval of the joint tenant, who would be legally entitled to half of the proceeds from the sale.
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The sale the property may not be in the best interests of the joint tenant, and he or she may choose not to cooperate. Another thing to consider is the fact that the property could be attached by creditors or claimants if the joint tenant was to run into financial problems. A soon-to-be former spouse could seek a portion of the property as well. A more effective solution that is safer all the way around is the creation of a revocable living trust. With these trusts you do not surrender control of the assets while you are still living. You can actually act as both the trustee and the beneficiary while you are alive and well. You name successors to assume these roles after you die. The trustee that you name in the trust agreement distributes assets to the beneficiary or beneficiaries after your passing. These distributions take place outside of probate.
CONCLUSION Probate is a legal process that can be time-consuming and expensive. It also strips your family of privacy, because the goings-on become a matter of public record. Because of the above, many people choose to avoid probate. Effective probate avoidance strategies exist, such as the utilization of a revocable living trust. The best way to proceed if you want to avoid probate would be to discuss all of
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your options with a licensed estate planning attorney.
REFERENCES Forbes http://www.forbes.com/sites/janetnovack/2012/10/14/the-forbes-guide-toestate-planning/ American Bar Association http://www.americanbar.org/groups/real_property_trust_estate/resources/estat e_planning.html
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About the Author Mark O.Costley With more than nineteen years experience in private practice, Mark Costley has helped hundreds of North Carolinians with estate planning, living trusts, financial law and probate, estate and trust administration. A partner with one of the largest and most vibrant estate planning practices in the Research Triangle area of North Carolina, Mark’s areas of practice are estate planning, trust and estate administration, planning for children and adults with special needs, business succession planning and business transactions, representation of non-profit organizations, family charitable and philanthropic counseling, civil dispute mediation, and business, estate and trust litigation. Mark’s work involves elements of teaching, strategic analysis and planning, negotiation, documentation, and assisting clients in executing their plans. Mark is devoted to providing clients with the best in estate planning, estate administration and financial services law. Mark is also a certified court mediator. Mark was drawn to and estate planning and financial planning law because of a passion for helping clients and their families avoid problems and helping them to have the necessary tools to preserve their wealth, prepare for the future and deal with problems when they do arise. Consistent with the philosophy of Walker, Lambe, Rhudy&Costley, P.L.L.C. to be “Your Counsel”, Mark and his colleagues in the Estate Planning Group strive to have strong relationships with clients and their families in order to be of the greatest assistance possible when legal counsel is needed. Walker LambeRhudyCostley& Gill, PLLC www.organizeyourassets.com Palladian Corporate Center 240 Leigh Farm Road, Suite 100 Durham, NC 27707
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