Probate Court
The probate court serves a very important function in our society. In the absence of some other arrangement (i.e. a funded living trust), this is the court that provides for the orderly payments of debts and transfer of property after someone’s death.
The probate court will verify whether a particular document is a valid will and then ensure the will is enforced and assets properly distributed.
Without the probate court to enforce a will, there would be chaos.
However, the system comes with a price. The price is time and money.
The probate process begins when the executor named in the will files the deceased person's will with the local probate court. The executor then
- takes an inventory of the deceased's property
- obtains any appraisals that might be needed for certain property
- pays taxes and other debts, and, after probate court approval,
- distributes remaining assets to heirs.
The biggest difficulty during probate is usually the requirement that every piece of property be located, inventoried, and valued. This can take a lot of time depending on the number of assets, their location, condition, value, etc.
[Note that many of these same tasks are required to distribute assets from a living trust as well. However, that process will not be supervised by a probate court and thus will generally be less rigid, easier, quicker, and less expensive. Also, if your assets are in a living trust, they generally are going to be easier to locate and value.]
The fees that often add up fast are the professional service fees. Depending on how big the estate is, and what assets it has, there may be fees to accountants, lawyers, property appraisers, and others. See Probate Attorney Fees.
There are also probate court fees and publication fees. These vary from state to state, but normally total less than $500. However, some states have recently begun to raise their probate court fees. In North Carolina, for instance, a 1.5 million estate, will now pay about $6,000 in probate court fees. Only two years ago, that fee would have only been $3,000.
As is a common theme -- it is the larger estates that will save the most money by avoiding probate.
However, some states require that a separate “guardian-ad-litem” be appointed by the probate court to oversee the executor's work. This is often another attorney, and his or her fees are also charged to the estate.
Throughout the process, there are opportunities for beneficiaries or creditors to complain to the probate court if they don't like something the executor is doing. This is a double-edged sword.
- On one hand, it makes the executor accountable to the court and it is less likely unethical conduct will occur. In this respect, going through probate has an advantage over using a living trust.
- On the other hand, it is easy to see how probate can be a cumbersome, slow and costly process. When parties can't agree, the probate process can get bogged down in litigation. In the worst cases, the litigation costs can virtually wipe out the assets of the estate.
So, having your estate distribution supervised by a probate court is not inherently good or bad. It just depends on your situation. Most people would rather the probate court not be involved as it usually will result in increased cost and delay. See How to Avoid Probate.
For many, a living trust is a better option. But the issue of probate court supervision is just one of the issues to consider. For others, see Advantages of a Living Trust and Disadvantages of a Living Trust.
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