What is Probate and How do I Avoid It?

THIS ARTICLE OFFERS GENERAL LEGAL PRINCIPLES AND IS NOT A SUBSTITUTE FOR ACTUALLY MEETING WITH AN ATTORNEY TO DISCUSS YOUR SPECIFIC CIRCUMSTANCES. DO NOT TAKE ANY ACTION BASED ON THIS ARTICLE WITHOUT FIRST DISCUSSING YOUR PROBLEM WITH AN ATTORNEY.

If you have ever had a discussion about Wills, Trusts and general estate planning, you may have heard the word “probate” come up as something awful to be avoided at all costs.

Probate refers to Probate Court where a Judge will review who survived the decedent, choose someone to manage the property of the deceased, iron out conflicts and then determine who is owed some or all of the property. As troublesome as probate can be, it doesn’t compare to the problems and costs of paying the 40% Federal Estate Tax on large estates or the 20% capital gains tax on sales of investments. So why all the fear of probate?

Common Challenges in Probate

One concern is that probate happens in open court. This means that if someone has the desire, they can show up to watch whatever transpires between family members as they resolve disputes with the help of a Judge. Each courtroom has plenty of seating for visitors that have no connection with the parties, but simply want some free entertainment. I have seen some of the worst of this happen while serving as a representative of one of the parties. 

Think of the reality tv shows where cameramen follow celebrity families around as they fight and tell family secrets. No family is perfect, and very few would want to see their children make family problems public. The more your family is known in the community, the more likely that others will want to attend probate proceedings. If you are prominent enough, reporters might even show up to get some dirt to tell on the 6 o’clock news. If you can avoid probate, no one outside of your family will know who inherited, what they inherited or why.

Another concern is time. The fastest probates can happen in only a few days. My record is three days.  Many families don’t even know a probate is needed until they have already found a buyer for the decedent’s home, and the closing deadline is looming. Suddenly the Title company surprises everyone by noting that because the decedent was listed as the owner on the most recent deed, no one living has authority to sign the new deed transferring the home to the buyer. A probate Judge has the ability to choose a Personal Representative. This person has court authority to sign the deed transferring the home. After choosing a Personal Representative to sign the deed, some probates end and no further filings are made. That was the case with my three day probate.

Other times the probate seems to take forever. Anything can slow down a probate. Sometimes the Judge assigned to the case is busy and can’t get to the file as fast as you might like. Other times a Judge may want to schedule multiple hearings, often a month or two from now, to give the parties time to make arguments. I have seen probates that could have been complete in a week take over two months because a non-party filed an objection, and the judge gave that non-party two hearings to make their arguments before finally ruling that the party had no standing.

What happens while waiting for a Judge to approve your petitions in Probate Court? Each month, the home may have a mortgage payment due, as well as utilities and maintenance. In November the county property tax will come due. 

The home may also have significant issues, like a worn roof that will need to be replaced, prior to sale of the home. Where will the money come from to pay for these costs? This problem may have to wait until the court appoints someone to manage the estate and access the funds needed to make repairs.

If a family member has verbally agreed to a particular division of property, their spouse may have time while waiting for probate to talk them into changing their mind. Many families have financial problems that an inheritance might solve, but looming deadlines might force them to resolve those issues without the inheritance because creditors refused to wait.

Probate has financial costs as well. If you attempted to handle probate court on your own, you will start by paying a court filing fee of nearly $400. If you review the various filings available on Utcourts.gov for probate, you may decide the process is too complicated to handle on your own and you may hire an attorney to assist you. This will usually cost a few thousand dollars. When there is a dispute between the possible heirs, this cost can grow to tens of thousands in a prolonged court battle. Parties can fight over who will manage and distribute the estate, who is a legal heir, who is owed money and property by the estate, and who will manage property for minors or those with incapacitating disabilities. 

Finally, probate extends the suffering of those who lost a loved one. Separation from a dear family member is difficult, and the added burden of court battles can rub salt in the wound. Emotions can be raw and often family members will react to probate problems by turning on each other, eroding and sometimes permanently ending family relationships.

Should Probate be Avoided at all Costs?

Though the problems above are real causes for concern and give significant motivation to find ways to avoid probate, not all things are a better option than probate.

One popular shortcut is to add an heir as a joint tenant on a deed or a bank account. As described in my last article, this can be a disaster. Loss of control of the home, a forced sale and loss of equity to the heir’s creditors, and 20% capital gains taxes that could add up to tens of thousands all make this shortcut a bad idea.

An Estate Plan, Properly Implemented, Can Avoid Probate

A Will can give someone your home at your death. This allows your heirs to avoid the capital gains tax when they sell the home. Unfortunately, a will can only do this in probate court, and it must be done within three years before the will expires. More is needed in addition to the Will to avoid probate.

A Trust has the power to name a successor Trustee who has instant authority at your death to sell the home without going to probate court. This process requires you to place your home in the Trust to be effective.

In addition to your home, vehicle deed transfers must pass through government offices and bank accounts will be in the control of bank managers concerned about giving the money to the wrong person.  Too many vehicles or too much money can trigger the government and the bank to refuse a transfer of assets until a probate names a personal representative.

At Prigmore Law we identify what issues may trigger probate in your estate and show you what tools you can use to avoid probate without forcing your heirs to pay high taxes or take other significant financial risk. When a family member has left behind assets requiring a probate, we can make the process as smooth and swift as possible. Give us a call today for a free consultation!

Ken Prigmore
Ken Prigmorehttps://www.prigmorelaw.com/
Ken has been a Utah attorney since 2006. With many years of experience in handling Wills, Trusts, and Probate, Ken can help his clients avoid probate and pass on assets to their children without any courtroom drama. Ken is happy to educate others on the pitfalls of estate planning. "It doesn't matter what you know about Wills and Trusts, it's what you don't know that's going to hurt you and your family." When away from the office, Ken likes to spend time with his family.

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