Avoiding Probate What Does it Mean and Why Avoiding Probate Can Save You and Your Estate Money Now
Avoiding probate, what does it mean? Keep watching to find out.
Last time I discussed why you should avoid probate. Today I'm going to discuss what it means to actually avoid probate. Now in this video up here, I discussed the probate process step by step.
So I'm not gonna go over it today, but you can watch it after you watch this video. To me, avoiding probate means avoiding high court costs and attorney fees, avoiding family disputes, avoiding time delays and avoiding uncertainty. First, let's talk about the high court costs and fees.
In other videos, I have gone over the average cost of a probate and said that it's around $7,000. Now that is only for one person. That means a married couple has to do this twice, once for each spouse, right. Think about the value of your estate, what percentage of your estate does $14,000 equal?
We see a lot of estates with homes where the total value of the estate is 80,000 to $100,000. That means the cost of two probates for a married couple is like a 14% penalty. Guys, that's a lot of money. $7,000 is an average cost if everything goes smoothly and no one is fighting.
If heirs do not get along, then you can at a minimum double the cost of a probate. The more the probate costs to settle, the less money is available for the heirs. The second reason to avoid probate means avoiding family disputes.
A probate is a very public process. It's an open court proceeding. That means anybody with a computer can get online nowadays and find out everything that is in the estate and who it goes to. It also means that that long lost relative has an opportunity to show up at a hearing, dispute the proceedings, and make claims to the assets.
It doesn't mean they're gonna get it but they can. Even if their claims are unfounded, they still have to be given the opportunity to the heard. That means delay in completing the probate, which means higher costs and higher fees.
There is also just something about money that changes people and makes 'em start fighting over it. Even those that you don't expect to. We had one family fight over a car, a car that was worth less than $1,000.
But all together with three separate law firms, they probably spent over $15,000 in legal fees, fighting over that car. And it was just because it was the principle of the matter. When money is involved, pride and greed gets in the way, unfortunately.
Reason number three, avoiding probate avoids time delays. Again, if everything goes smooth, and no one fights, a probate takes about four to six months here in Oklahoma. With the pandemic, hearings are being rescheduled two to three months, unfortunately. There's nothing we can do about it. We had several probates ready to close that will now not be completed until mid to late summer.
Even under normal circumstances, there are all kinds of reasons a probate might be delayed for months. Maybe one heir does not want to do something or they refuse to sign a piece of paper.
Reason number four is to avoid uncertainty. Like I have said, a probate is an open proceeding, and anyone can show up and lay claim to the estate. If you have reason to believe someone might show up and make a claim or fight with other heirs, then why live with that uncertainty?
Avoiding probate will avoid, it'll avoid this uncertainty and unease during your lifetime. Because you know what probably is gonna happen, so why let it happen?
Guys, I have just gone over a few reasons to avoid probate. I am certain we could think of many, many more. But why when the better answer is to create an estate plan centered around a revocable living trust? You've heard me say this before.
Now, in this slide here, you can see how the probate process works. All of your assets like your house, bank accounts and jewelry, will all have to go through the probate court. The process is the same whether you have a will or not. And ultimately, it is the judge, not you, that is the decision maker in your estate if you have to go through the probate process.
Now we have some awesome probate judges but do you want someone making decisions regarding your estate? Or do you want to be the one making those decisions for your estate? It's up to you. Now let's look at how the process works with a revocable living trust. As you can see here, you still have all the same assets, but they are owned by the trust if your trust is properly funded. So when you become either incapacitated or you pass away, your successor trustees simply steps into your shoes and takes over without any court intervention.
So you can see how this process is so much better. At least, that is what I think after 20 years of doing this. You can watch this video up here on why a revocable trust is a better option, after you've finished watching this video, of course.
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