One of the most common secondary goals included in estate planning is probate avoidance. You may, in fact, have heard people discussing the importance of avoiding probate and/or the desirability of doing so. If you are unfamiliar with the probate process, however, you may not fully understand why avoiding probate is such a popular goal. To help clear that up, Ray German, attorney at German Law explain the top three reasons for avoiding probate.
What Is Probate?
When most people die, they leave behind an estate that consists of all assets, both tangible and intangible, owned by the decedent at the time of death. Probate is the legal process by which those assets are identified, located, valued, and eventually distributed to the intended beneficiaries and/or legal heirs of the estate. If the decedent left behind a valid Last Will and Testament, the individual named as the Executor in that Will is responsible for overseeing the probate process and the terms of that Will dictate how the estate assets are distributed. If the decedent died intestate (without a Will), someone typically volunteers to be the Personal Representative of the estate which entails essentially the same duties and responsibilities as an Executor. In an intestate estate, the state intestate succession laws will be used to determine the distribution of estate assets.
Avoiding Probate
The following are three of the most common reasons people give for the desire to have their own estate avoid probate:
- Probate is very time-consuming. Probate can take a very long time to complete. The value, size, and complexity of the estate will impact how long it takes to get through the process; however, probating even a relatively modest and uncomplicated estate in North Dakota will take a minimum of four or five months because creditors of the estate have three months after notification to file claims against the estate. Those claims must then be reviewed and approved or denied. In addition, some of the additional steps in a typical probate that contribute to the time it takes to get through the process include:
- Identifying, locating, and valuing all estate assets.
- Categorizing assets as probate or non-probate assets.
- Opening the probate of the estate by filing a petition, along with an official death certificate, in the appropriate court.
- Notifying creditors of the estate that probate is underway.
- Identifying, locating, and notifying beneficiaries and/or heirs of the estate that the estate is being probated.
- Reviewing and approving or denying creditor claims.
- Prioritizing and paying approved claims.
- Selling assets, if necessary, to pay creditors.
- Defending any challenges to the Will or litigating any claims made by creditors that were denied.
- Calculating any paying federal (and state, if applicable) gift and estate taxes
- Effectuating the legal transfer of the remaining assets to the named beneficiaries and/or legal heirs of the estate.
- Probate can be expensive. The cost of probating an estate can be high, particularly if the estate becomes involved in litigation. Even if the estate avoids litigation, everyone involved in the probate process is entitled to a fee for their services, including the Executor, accountants, attorneys, real estate agents, and appraisers. The costs associated with probating the estate are paid out of the estate assets, often substantially diminishing the value of the estate that is ultimately passed on to beneficiaries.
- Probate is public. If you would prefer that the details of your estate plan remain private, avoiding probate is crucial. The moment your Executor submits your Last Will and Testament to the appropriate court to initiate the probate process, the terms of that Will become public record, meaning anyone can view the terms. If you prefer to keep the details of your gifts out of the public domain, you may wish to use a trust to distribute your estate assets instead of a Will because the terms of a trust remain private. Moreover, the assets held in a trust are not considered probate assets, meaning they can also be distributed outside of the probate process and immediately after your death if you wish.
Contact a North Dakota Probate Attorney
Please join us for an upcoming FREE seminar. If you have additional questions or concerns regarding the probate process in North Dakota, or about how to avoid probate in your estate plan, contact the North Dakota probate attorneys at German Law by calling 701-738-0060 to schedule an appointment.
- Updating Your Life Insurance - September 29, 2022
- What’s Estate Planning Got to do with Interest Rates – Part II - September 27, 2022
- What’s Estate Planning Got to do with Interest Rates – Part I - September 22, 2022
