Avoiding Probate

As part of the estate planning and succession planning services that Nardone Limited provides, assisting our clients to ensure that their assets avoid probate is certainly part of the discussion.  This article addresses the main reasons why you would want your estate to avoid probate.

Probate is a legal proceeding to: (i) administer certain kinds of property (called probate property) owned by someone who has died (called the decedent); (ii) see that claims, expenses, and taxes are properly paid; and (iii) see that the remaining estate is distributed to those entitled to receive it under the decedent’s Will or Ohio law. The probate process is administered under the authority of the county probate court. The following are some of the top reasons why you would want your estate to avoid probate:

1.  Costs

For their services, the attorney and executor are entitled to fees from your estate, which may be very expensive. In some jurisdictions, the attorney’s fees are what a court approves as “reasonable,” and in other jurisdictions it is based on the value of your estate.  Regardless, with an estate of $400,000, attorney’s fees can easily amount to $20,000.00 or more. There are also appraiser’s fees for appraising the value of your estate. Finally, there are the court’s filing fees. All together, these fees could cost your estate thousands of dollars.

 2.  Delay

The probate process is something that is controlled by courts. It can take a minimum of six months from the date of death, but if there are creditor issues or an Ohio or Federal estate tax return is required to be filed, this process may last more than a year. If there is a contested Will or complicated tax litigation, this process could even last years.  And, not until debts are paid off and contested matters settled, may the executor distribute your estate’s assets to your loved ones. Thus, the probate process may present a significant delay for your assets to be distributed to your loved ones. It is also important to remember that your most valuable asset is likely your dental practice. Thus, the sale of your dental practice would have to go through probate and proceeds from the sale would be tied up with the probate process as well.

3.  Privacy

Court documents are public. Today most courts have their dockets on their website where anyone may access a copy of the papers that have been filed with the court. The court’s docket includes filings that reveal all of your assets going through probate, the value of your assets, your Will, and various other personal matters of your estate, which would all become public.

4.  Your Loved Ones

As important, if not the most important, is the negative impact the probate court process has on your loved ones.  It is difficult enough that they are dealing with the loss of a loved one.  Now, by having to participate in the probate process by ensuring your assets are properly administered in compliance with the probate court rules, they are continuously reminded of it.  This process can take up to 18 months after the date of death.

Thus, there are steps that can be taken to ensure your assets avoid probate.  In next month’s article, Nardone Limited will address those steps that each of you should review and discuss with your family.