Unfortunately, death seems to occur when families are the most vulnerable and least prepared. It can hit like a ton of bricks, leaving an enormous crevice between dreams and reality. The most massive crevice is what I refer to as the “probate gorge.”
Imagine one side of a gorge holding all of the possessions you acquired during your lifetime: a home, cars, bank accounts, life insurance, retirement accounts and more. Now imagine your surviving loved ones on the other side of that gorge. While they are entitled to everything you worked for during your lifetime, there is no “estate planning bridge” that carries them to your possessions because you failed to build one before your departure.
When this happens, your loved ones are forced to wait for the court to build a bridge for them. That bridge comes with a large price. Your loved ones will only receive your possessions after the court and the attorneys have been paid for their fees, probate court costs, recording fees, death taxes, accounting fees, appraisal costs, executor commissions, publication costs and more. Payment will come from assets that would have been distributed to your beneficiaries had you taken the necessary steps to avoid probate.
Probate is the legal process by which a court appoints someone to manage your affairs. That person pays your debts and distributes your assets to your heirs according to your will, or according to state law if you have no will. The process may take a year or longer if there are complex issues to resolve and can cost 6 percent or more of the total value of your estate. A probate may be required in every state where you own property. However, you can take steps to avoid the costs and delays of probate.
Consider the example of Troy and Nicole, who were married with two minor children when they were involved in a head-on collision that killed them both. They had no wills. It was impossible to determine who died first, and each person is presumed by law to own half of all of their assets, so both estates were probated. A court-appointed guardian must manage the estates until the minor children turn 18. Had Troy and Nicole established a living trust naming a successor trustee to handle their assets upon their deaths, no probate or guardianship would be required.
Then you have Todd, a 30-year-old fireman, who was killed in the line of duty. Unmarried and the individual owner of all of his assets, he had just a will leaving his parents everything. Todd’s parents must take his estate through probate to acquire title to his belongings as specified in his will. Had Todd created a living trust, no probate proceeding would be required to transfer his assets as he intended.
Avoid the probate gorge, illustrated by the above examples, by contacting a qualified estate planning attorney who can help you plan for unexpected events by preparing an estate plan for you.