Concerns about probate administration are common during estate planning. Everyone has heard horror stories about estates held up for months or years while the court decides on how to administer them.
According to U.S. News & World Report, the probate process is a common occurrence. There are many ways you can mitigate its effects or even avoid it altogether.
Do all estates go to probate court?
All estates do go to probate, but having a will and executor in place makes for a more streamlined process. Without a will, the court chooses an administrator and divides your estate according to state intestate laws. This process takes much longer to complete and can overturn your wishes regarding your assets if they differ from prevailing laws.
How can I avoid probate?
Assets within trusts do not go through probate. Instead, they pass directly to heirs according to the provisions laid out in the trust. Provisions can disperse assets over a period of time, or require that an heir take some action, such as graduating from college.
You can avoid probate using other methods. A transfer on death deed automatically transfers property or assets to the named heir. You can also make a person co-owner on a bank account or property. However, naming a co-owner gives that person equal ownership over your assets, which can lead to issues while you’re still alive.
What about family disputes over inheritance?
For many people, family fights over money are more damaging than the probate process. You can head off potential disputes by including a no-contest clause in your will. These clauses stipulate that any person who disputes the terms of the will receives nothing.
You can also include a clause that demands mediation instead of litigation if a dispute does arise. Mediation involves negotiations between two parties and an unbiased mediator, who makes decisions based on the facts presented.
Another way to head off potential disputes is by being open and transparent about your decisions. Something as simple as sending a heartfelt letter to heirs may go a long way.