The Many Ways That An Estate Plan That Avoids Probate Can Help You

It is true that, is some situations, the probate process can be very time consuming. While your family might find this disadvantageous due to the stress of having this legal process hanging "over your head," the possible drawbacks of a time-consuming probate process go beyond that. In some circumstances, a drawn-out probate process can mean that your money might be tied up for weeks or even months without your loved ones having it available. That means that, while your bills, ranging from final expenses (if you don't have final expense insurance) to property taxes and utilities to legal fees all must be paid without access to that money. With an estate plan that successfully avoids probate, your money may be made available to pay for your final bills in a much faster manner.

Some people are also concerned about the potential loss of privacy that goes with many probate processes. In this age of identity theft and a wide array of other scams and predators, creating a public record of your wealth and the amount of wealth your loved ones will receive from you is something a lot of people might reasonably want to avoid. Creating this public record has other possible drawbacks, as well, depending on where you live. In some states -- Michigan is one such example -- the easiest way for your unsecured creditors to go after your assets is through your probate estate. If your estate avoids probate, and there is no need to open a probate case file at all, then you may be able to transfer your wealth to your loved ones without those creditors even knowing. 

Probate can be costly. Like most any legal process there may be lots of fees. A fee to open a probate estate. A fee to obtain what's called letters of authority or letters of administration. Inventory fees. And so on. What's more, the more wealth you have in your probate estate. the bigger those fees often are. Many states have considered or enacted significant increases in probate fees as a way to pay for a shortage of the funds needed to keep the state's courts running.

A few years ago, to address a budget shortfall, the state House of Representatives in Florida considered raising formal probate administration fees from a few hundred dollars to as much as $5,000. In Connecticut, the state addressed a $32 million probate court budget shortfall by increasing the price of probate fees such that those fees now pay for the probate courts' entire budgetary needs. An estate of just $600,000 (which for some people, is just the value of a home and personal property) carries a filing fee in excess of $2,000. If, for example, you are a small business owner with a $5 million probate estate, the administration fee, under the new law, is now more than $20,000. If your estate is more than $7 million, it's more than $30,000. 

However, with a carefully crafted and executed estate plan that avoids probate, you can protect yourself against the many threats, logistical hurdles and ever-increasing costs that go along with the probate process. A qualified estate planning professional can help you decide what type of plan works best for you.

Summary: If you've done much research about estate planning, you're probably familiar with probate and the notion of avoiding it. Avoiding probate may be beneficial because the probate administration process can be costly in terms of time, money and privacy. But the potential issues with the probate process, and the possible benefits of probate avoidance in terms of time, money and privacy, go beyond just want you may immediately think of. The advantages of an estate plan that is properly constructed and carried out to avoid probate, when it comes to saving you and your loved ones time, money and privacy, are actually even greater than what may appear on the surface.   

5 Common Mistakes When It Comes to Estate Planning - Legacy Assurance Plan

As with any area knowledge, estate planning is something that may seem very mysterious or overwhelming to some. For others, they may think they know about estate planning, but as the old quote from English essayist Alexander Pope says, "a little learning is a dangerous thing." In order to make informed decisions about your estate plan, it helps to know what is truth, what is misconception and what is myth. With that in mind, here is a group of five erroneous thoughts people have about estate planning, and why they can be dangerous.

(1) I don't have enough wealth to justify creating an estate plan. Experts universally agree that, regardless of the size of your estate, you should create an estate plan. Even if you have only modest wealth, chances are that you care about the legacy you'll leave behind and who receives your assets. If you don't create a plan, the state makes one up for you and the distribution plan your state creates probably won't match your wishes. Additionally, a thorough estate plan does a lot more than just distribute your assets. It also can enhance your control regarding who manages the affairs of your estate after you die, who would make decisions for you if you became incapacitated and who takes over as the guardian of your minor or special-needs children.

(2) I already have a will, so my estate plan is set. Not necessarily. A will is an integral part of any estate plan, but a will by itself is rarely enough. Your will allows you to dictate directions regarding the distribution of your assets, but it does provide you any assistance regarding who acts on your behalf if you were alive but unable to make decisions for yourself. A complete estate plan would, in addition to a will, also include a financial power of attorney that allows you to designate an agent who would step in to manage your finances when you're unable, as well as documents that would allow a person of your chooisng to make decisions for you regarding personal, healthcare and end-of-life choices.

(3) Living trusts are only for the very rich. Not true. While it is true that living trusts can offer certain tax-related benefits to people with large estates, they also provide advantages that people with any size estate can receive. Properly created and maintained, they avoid probate. This has the potential to save your family time and money distributing your wealth after your die. Also, probate administrations matters are public in most states, while the process of wrapping up a living trusts is typically carried out without the creation of any public records. So, if you're concerned about privacy, this can be a substantial benefit.

(4) I created a plan with all of those documents. They're signed, notarized and safely stored. I'm all finished. Also not true. Your estate plan is similar to your car, your home or your health. They need regular care and maintenance. A periodic analysis, or check-up, can ensure that the plan you executed is still in optimal condition. Maybe something in your life has changed. Maybe the law has changed. Or maybe you just changed your mind about something. A periodic review can make sure that your plan meets your goals as they stand today.

(5) Anyone can create an estate plan. This is a mistake, too. You may have found a form book at a library or an office supply store. Or maybe it was a page on the Internet. Those documents were probably drafted by capable professionals, but they may not have been lawyers from your state, and they definitely weren't created based upon a personal consultation with you. The best estate plans are those whose documents are customized based upon the unique estate planning laws of your state of residence and the specific parameters of your desires and objectives. Also, be careful about picking just any lawyer. You probably wouldn't want an expert in patent law to defend you in a murder trial and you also probably wouldn't choose a mergers-and-acquisitions attorney to handle your child custody case. Similarly, an attorney from your home state who deals regularly with estate planning cases can offer you advice, insight and strategies that other lawyers might not have.

Summary: People have lots of things they think they know about estate planning. Sometimes they're right, sometimes they're a bit off-base and sometimes they're wrong. By educating yourself, you can learn why experts universally agree that everyone needs an estate plan, as well as how to move pro-actively to ensure you get the best plan possible for you.