Again it is time to get back to basics.
Avoiding probate is a primary reason to set up a living trust instead of a will . There are several reasons to avoid probate, and in California particularly the reasons are worth paying attention to.
First, what is probate? The word comes from the Latin for proof, and the process starts with proving to the court the validity of the will. Thus the court is involved from the first step, and on to the last step of distributing money to the heirs. Approval of the court must be obtained all along the way.
The following reasons for avoiding probate are thus the same reasons for staying out of court in other legal matters.
1. Probate is expensive. In California, attorneys’ and executors’ fees and court filing fees are all based on the total value of the probate estate. For a $300,000 California probate estate, just attorneys’ fees would be $9,000. For a $1,000,000 estate, attorneys’ fees would be $23,000. Court, referee and other fees are added on top. More detail on probate attorney fees is available here.
2. Probate is slow. Having to go to court can result in lengthy delays in distribution of the estate to the beneficiaries. A four month waiting period must be given to creditors, so that even in the smoothest and quickest of probates, the process takes a minimum of seven to nine months. If there are any bumps in the road, the time can be greatly increased. I recently heard of a small probate that was filed in 1998 and is still tied up in court 13 years later!
3. Probate is not private. Documents, including financial records, filed in probate court, become public records, and are available to tele-marketers and the general public. The desire to secure privacy is sometimes by itself reason enough to stay away from the probate courts.
These reasons to avoid probate do not always apply. It may be desirable because of unique family circumstances to have court supervision from the outset. In that case, the last will and testament can be used in place of a living trust as the primary estate planning document.
Be informed. Knowing the basics of estate planning is essential to creating a plan that actually carries out your wishes. It’s your life and your legacy. It should be your plan.