What Is Probate, and Why Does Everyone Avoid It?

The word shows up in every estate planning article, usually right before the word "avoid," and usually without a definition.

Probate isn't a boogeyman, but it is public, slow, and paid for out of your family's inheritance, and most people don't learn what it involves until they're in it.

What probate is, and why people avoid it

Probate is the court supervised process of validating your will and distributing your estate after you die. It's public record, it can take months or longer, and the costs come out of what your family receives. A will goes through probate. A funded living trust skips it entirely, which is the main reason people choose one. Whether that trade is worth it depends on your estate, your privacy preferences, and your patience for courts, but now you know what the word means.

The Probate Process: Step by Step

Understanding probate begins with a clear step-by-step view of what happens. First, after someone passes away, their will is submitted to the probate court. The court then verifies the will's authenticity and appoints an executor or personal representative. This person is responsible for managing the estate, notifying creditors, and paying off any debts. After debts and taxes are settled, the executor distributes the remaining assets to the beneficiaries as the will specifies. This process can take several months or even years, depending on the estate's complexity and any legal challenges.

Costs Involved in Probate

Probate comes with a price tag that can significantly impact what your heirs receive. Fees often include court costs, executor fees, and attorney fees. For example, if you own a $400,000 home in California, probate fees might reach up to $10,000, not counting other estate assets. Legal fees alone can eat up 2% to 4% of the estate's value. These expenses are deducted from the estate before assets are distributed, reducing the net amount your family inherits.

Hypothetical Scenario: Probate Impact

Imagine you have a $500,000 estate consisting of a home and other investments. If your estate goes through probate in Florida, you might pay approximately $20,000 in various costs. The process could delay the distribution of your assets by a year. Meanwhile, if you set up a funded living trust for the same estate, the probate process can be bypassed, avoiding these fees and delays altogether. This scenario highlights why some people choose to establish a trust instead.

Choosing Between a Will and a Trust

When deciding between a will and a trust, consider factors like the nature of your assets, your privacy needs, and your financial and familial situation. A will is simpler and free, perfect for those without extensive assets or complicated needs. Trusts, meanwhile, offer privacy and can be quicker but come with higher setup costs. The right choice depends on weighing these aspects against your circumstances.

Common questions

Q: What is probate? A: Probate is the court supervised process of validating a will and distributing an estate after someone dies.

Q: Why do people try to avoid probate? A: People avoid probate because it is public, slow, and costs are deducted from the estate.

Q: How long can probate take? A: Probate can take several months to years, depending on the estate's complexity.

Q: What are probate costs? A: Probate costs include court fees, executor fees, and attorney fees, often reducing the estate's value.

Q: How can a trust help avoid probate? A: A funded living trust bypasses probate, helping save time and reduce expenses.

Thinking a trust might be the way around it? Read Is a Trust Only for Wealthy People?.