While the probate process can work in your favor to protect your assets, there are instances when strategies used to avoid probate create additional problems.
The probate process helps protect your intentions for the distribution of your assets after death. It gives finality to creditor claims against the estate and authorizes the probate court to insure compliance with a decedent’s wishes. The process requires that an individual’s financial assets be defined, insures that they’ll be given to the proper persons and provides a procedure for protecting the distribution that was planned by the decedent.
There are a number of efforts underway in several progressive states to help people avoid probate. When discussing the role of trusts in estate planning, individuals are frequently advised to make every effort to avoid probate. But this isn’t always the right answer.
Using a trust rather than going through probate involves risks, including:
- Legal Contests. When someone is left out of a trust, or if the trust assets are improperly restricted in their use, then he or she can initiate a contest. Undue influence is frequently alleged when a trust is created just before death.
- Probate Protections. A will requires two or more witnesses, written testimony of the witnesses, and must be notarized in some states. However, a trust can be created with just a signature and even implied in some instances with no written document. Therefore, it may be easier to create an improper trust than an improper will.
- Potential for Mistake and Misuse. If the document is a trust, a transfer on death account, a joint ownership or a simple deed, it is easier to have an elderly loved one sign a single document such as a trust, instead of trying to have him or her pass the scrutiny of two witnesses and a notary, as required for a will.
Estate planning strategies need to be properly created well in advance of death by an experienced estate planning attorney to avoid an estate battle and a splintered family.