Although your initial estate plan may be fairly simplistic, it will likely grow as both your estate and your family grow. As such, you will need to decide what additional estate planning goals and objectives you wish to add to your plan. A common estate planning goal you may wish to consider is probate avoidance. To help you decide if probate avoidance should be part of your estate plan, the probate attorneys at Hedeker Law, Ltd. explain why probate avoidance is a common estate planning goal.
What Is Probate?
Most people leave behind an estate when they die. That estate consists of all assets owned by the decedent at the time of death, including real and personal property as well as intangible and tangible assets. Ultimately, those assets must be legally transferred to the new owners, either beneficiaries chosen by the decedent or legal heirs pursuant to the state’s intestate succession laws. Before that can happen, however, the estate must go through the legal process referred to as “probate.” During the probate process, several important things occur, including:
- All estate assets are identified, located, and valued
- Last Will and Testament is authenticated
- Any challenges to the Will are litigated
- Beneficiaries and/or heirs are notified
- Creditors are notified
- Creditor claims are reviewed and approved or denied
- Gift and estate taxes are calculated and paid
- Remaining assets are transferred to the new owners
Why Is Probate Avoidance Desirable?
There are two basic reasons why people often choose to add probate avoidance to their estate planning goals – time and cost. Probating even a relatively simple estate can be very time consuming. Every state allows creditors a time period within which they may file claims against the state. Although the amount of time varies from state to state, four to six months is the average and the probate process cannot terminate before the end of that time frame. Practically speaking, this means that probate assets are tied up for months waiting for the conclusion of the probate period. Meanwhile, intended beneficiaries are unable to reap the benefit of those assets. Leaving your spouse $100,000 in an investment fund doesn’t do him/her any good in the short term if the funds are out of reach because they are tied up in probate.
Cost is the other drawback to probate. As a general rule, the longer it takes to probate an estate, and the larger the estate is, the more expenses are associated with the probate process. Everyone involved in the probate of an estate is entitled to a fee, including the Executor, estate planning attorney, appraisers, and accountants. Costs associated with the probate process are deducted from the estate assets, thereby diminishing the value of the estate that is ultimately passed down to loved ones.
Because probate can be costly and time-consuming, many people choose to include probate avoidance tools and strategies in their estate plan. One of the easiest ways to accomplish this goal is to focus on converting probate assets to non-probate assets. Because not all assets are required to go through the probate process, this simple strategy can be extremely beneficial. Assets held in a trust, for example, bypass the probate process altogether. Consequently, those assets can be distributed to beneficiaries as soon after your death as you wish using the terms you create when you establish the trust. Likewise, certain types of joint ownership allow your interest in an asset to pass automatically to the co-owner(s) immediately after your death without the need for that asset to go through probate. Life insurance proceeds are also an excellent probate avoidance tool because those funds can be distributed immediately to the designated beneficiary instead of being held up in probate. Talk to your estate planning attorney about ways you can include probate avoidance in your estate plan.
Contact Probate Attorneys
Please feel free to download our FREE estate planning worksheet. If you have questions or concerns regarding probate avoidance in Illinois, contact the experienced probate attorneys at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.