What’s Probate and How Can You Minimize the Cost?
Probate is the legal process that occurs after your death in order to settle your estate. The process can vary depending on your situation. For example, in Massachusetts there are four types of probate: (1) Voluntary Administration, (2) Informal Proceedings, (3) Formal Proceedings, and (4) Supervised Administration.
While the exact steps vary depending on which category your estate falls under, the process usually entails validating your will (assuming you have one), appointing an executor (called a Personal Representative in MA), notifying heirs/beneficiaries and creditors, inventorying and appraising of probate assets, paying creditors for estate expenses, funeral expenses, debts, and other taxes that may be owed, and finally distributing your probate assets in accordance with your Will (or by intestate succession laws, if you don’t have a Will).
The process can take anywhere from a few months to a few years depending on the complexity of your estate. For that reason, costs tend to vary drastically (generally, anywhere between $1,000 to $10,000) with the biggest factor likely being the size of your probate estate. It also helps to get an affordable and experienced probate attorney as their time is likely to make up the majority your probate fees.
Fortunately, there are a few things you can do to reduce probate fees and the time it takes to settle your estate. First, add/update beneficiary designations on your financial accounts so that they go directly to the person you want. Second, in some situations you may want to re-title assets. For example, it’s not uncommon for elder parents to re-title their homes by creating a life estate and making their adult children joint owners. Third, you could create a living trust and re-title all your assets to the trust along with updating beneficiary designations so those assets automatically go to the trust upon your death. If done correctly, you may be able to avoid probate completely.
However, having assets go through probate is not the end of the world. You can also reduce probate fees by making sure your Will is well drafted to streamline the process. For example, clearly outline who you want as personal representative (and alternates if that person is not available), give your Personal Representative the power to sell real estate to avoid needing court approval, specify waiver of bonds and unsupervised administration, appoint guardians/conservators for your minor children, clarify your intentions as to who should get what to avoid any uncertainty and delay, and plan for contingencies in the event that someone you name is no longer living or is not able to directly receive the property due to age or disability.
If you have any questions about probate or estate planning in general, then please feel free to contact Joseph Lento at Perennial Trust by calling (781) 202 – 6368 or emailing firstname.lastname@example.org. You can also download our Free Estate Planning Guide. Thanks for reading!