Many people know that it is wise to create an estate plan that allows your estate to avoid probate when you pass away. But few know or understand why probate it something to be avoided. One of the ways to understand it is to take you through the process of what happens when someone passes away.
For our purposes here, imagine for a moment that it’s not you that is passing away, but rather your closest family member – except for this discussion let’s choose someone other than our spouse. Take a quick moment to think of how difficult that would be to lose someone you love so dearly. And now, imagine all that there is to do when someone passes away:
- There’s the funeral, which generally happens pretty quickly and plans are made within hours of the death. There are decisions to be made about clothing, caskets, scheduling day and time, who will read, what will they read, will there be a gathering afterwards, will there be food, where will it come from, who will be invited…it’s overwhelming.
- Then there’s the will – is there one? The life insurance, the retirement accounts, the bank accounts. You go to the house: do you know where your loved one keeps the important documents? Would you be tearing apart the desk, the file cabinet, the drawers? What would you find? How would you feel about having to search?
REMEMBER: This is all in the first few hours and days after the death, at a time when the loss is most shocking, most raw, and most difficult to deal with.
- Once you find the documents – did you find them? – you have to figure out how to transfer the property, and generally – without a plan – this means the probate process, which we’ll talk about in a minute.
- In come the lawyers, the lawyer’s fees, the appraisers – the strangers, in your home, in your life.
- To transfer the property, the pay the debts, to sell the house – or even transfer it – to get access to the bank accounts…all of these things can take weeks, months and years.
- The probate process, which is the court procedure for transferring your property when you don’t have an estate plan or have just a will, is a long, arduous process. It involves:
- Multiple court hearings and appearances, lawyers, accountants, appraisers…
- A timeline of 2-3-5 years…or more
- Cost: A huge cost. Probate fees and costs can take up to 8-10% of your gross estate – that’s your assets not including your debt, so if you have a house worth $300,000 and nothing else, probate fees can be up to $30,000
- You have – your family has – worked your entire LIFE to create and build your estate. Why give it to lawyers and courts?
In the probate process, while the cost is a big consideration, the time is also key because you and your family need and want to move on from the death and the grief, and when the probate process continues on for years and years – and you can’t sell the house, and you can’t get access to the accounts, then it drags out the normal emotional process way beyond what is healthy.
Does this sound like something you want to go through? Something you want to put your family through?
Now, what if I were to tell you that there is a BETTER WAY? A way to avoid ALL of this trouble? We’ll go through this again in the next blog post…stay tuned!