Many people assume that the only planning documents they need to keep their assets safe is a will. Relying on a will to distribute your estate guarantees that your estate will go to Probate court.
What are the Negatives of Probate?
Probate is the court-supervised distribution of your assets when you die.
This purpose of Probate is to ensure that debts are paid and determines who is entitled to inherit assets from your Probate estate which are those assets that do not have a named beneficiary at your death.
Those who might be legal heirs, like spouses, children, step-children or adopted children will then have the opportunity to voice objections or suggestions to the Probate Court. You can infer why many want to avoid this court-mandated exercise. Amidst dealing with grief and final arrangements, the last place grieving family members want to go is a courtroom to fight for the assets that they should rightfully inherit. The process causes unnecessary delays and expenses.
The length and hassle of the Probate process depends on how large the estate is, whether there is a will, and whether or not spouses or potential heirs object, and this is just in Ohio. In many other states the process is even more tedious and complicated. What if you own property in other states? Your family members could be in court for years fighting for the property you thought you left for their benefit. This is a complicated process that may disinherit those you love.
Any asset that does not have named beneficiaries or is not a trust asset must pass through Probate Court. This default court process to administer the estate surprises far too many families. In reality, creating a will does not stop with drafting the will. It continues and escalates at your death.
How can you help your family avoid the harsh process of Ohio Probate Court? To avoid Probate you options such as:
- Establishing a trust that names beneficiaries directly on your financial accounts
- Setting up Transfer on Death designations for cars or bank accounts, although this has some drawbacks
- Adding beneficiaries on your retirement accounts and IRAs or 401(k)s
- Creating a trust that holds your real estate or setting up survivorship deeds
- Making sure you have beneficiaries on your life insurance
A trust is a very common strategy to avoid the cost, delays and hassles of Probate but there can still be important steps that need to be taken after the creators of the trust pass away.
It is very important that the beneficiaries of all life insurance policies be properly named and that they be reviewed from time to time to take into account changes in family circumstances.
Problems with Probate
Probate is also a matter of public record. Anyone can go to court and view a decedent’s probate file containing detailed financial records and estate planning documents.
Many people assume that a will can keep your estate out of probate court. Actually, the opposite is true: Having a will guarantees that your estate will go to probate court. After your death, all the assets your will covers must pass through probate before the court can distribute them to your heirs. Assets a will doesn’t cover or aren’t subject to probate include insurance, annuities or IRAs that have a living beneficiary, property with a survivorship, payable on death or transfer on death designation, property help in certain trusts where the estate itself is not the beneficiary.
Probate proceedings vary from state to state, and some are more complex and formal than others. In Ohio, the type of probate will depend on the size of the estate, whether or not an original will is available, whether the spouse will elect against the will and whether any of the potential heirs will challenge the will.
If you own real estate in more than one state, you’ll probably have to initiate probate in each state.
Most probate courts take the following steps:
- Admit the will to probate and determine its validity
- Notify the decedent’s heirs and beneficiaries of the proceedings
- Obtain waivers of notices and approval for an executor to be appointed
- Inventory and appraise the decedent’s assets
- Make sure all creditors are paid
- Pay state estate (death) tax and federal estate (death) tax
- Distribute assets to heirs and beneficiaries according to the will’s instructions.
In Ohio, the Probate process has three main steps:
Appoint an executor and admit the will to probate.
All heirs have the right to attend a hearing to determine if the will is valid and who should become the executor.
Prepare an inventory of assets.
All potential heirs are entitled to a hearing to determine if the inventory is accurate.
File an accounting to show the receipts and disbursements of estate assets.
All heirs are entitled to a copy of this accounting and can attend a hearing if there are questions.
*Dually certified by the National Elder Law Foundation as Certified Elder Law Attorneys and the Ohio State Bar Association as Specialists in the Area of Elder Law.