Probate Court

It's definitely worth talking a bit about probate, since avoiding probate is probably the biggest reason people get a living trust.

The probate court serves a very important function in our society. In the absence of some other arrangement (i.e. a funded living trust -- which requires settlement rather than probate), 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 sometimes 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.

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.  Here's more about probate taxes and fees.

As is a common theme -- it is the larger estates that will save the most money by avoiding probate. You can read more about this at Is Probate Lengthy and Expensive?

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. Also, it's important to remember that some assets won't have to go through probate. For more about that read What Is Subject To Probate and Joint Ownership.

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.

Probate Articles:

1. Probate Attorney Fees
   Probate attorney fees are often a concern for will executors, and family members, after a loved one passes. Here's tips on getting the best probate attorney fees for you.
2. What is Subject to Probate?
   Basically, everything is subject to probate unless it is in a living trust or it can be titled in the name of a second owner or beneficiary so that it goes automatically to them if you pass away.
3. Is Probate Lengthy and Expensive?
   Many people think probate is lengthy and expensive. Find out whether probate is lengthy and expensive.
4. How to Avoid Probate?
   Probate gets a bad rap. Everybody, always, wants to know -- how to avoid probate. How to avoid probate -- a Living Trust is a great way.
5. How to Probate an Estate
   Travel with me as I probate my grandmother's estate.  Along the way you'll learn everything you need to do it yourself.
6. Probate Taxes
   Probate taxes or fees are one disadvantage to taking an estate through probate -- and therefore, an advantage of putting your assets in a living trust that avoids probate.
   
7. Joint Ownership
   Joint ownership with rights of survivorship is a common form of property ownership. One benefit of it is that the property passes to the surviving owner without having to go through probate.
8. Duties of an Executor
   What are the duties of an executor of an estate?  Here's some practical tips for taking an estate through probate.
   
9. How to Obtain a Tax ID for an Estate
   The video explains and shows step by step how (and why) I obtained a tax ID for my grandmom's estate.
   
10. How to Get a Federal Tax ID Number for a Trust
    The video shows exactly how I obtained a tax ID for my grandmom's trust. You'll see it's very easy to do.

From Probate Court to Living Trust Information