Probate: The Things Your Clients Need to Know

At some point, every estate planning client will inevitably ask if they should avoid probate—some even naming avoidance of probate a priority in their estate planning goals.
Legally speaking, probate is the process of clearing the titles of certain property after someone dies to allow transfer of ownership to the beneficiaries named in the will. If your client truly wants to avoid probate, this can take time and energy. It’s important to analyze the client’s situation thoroughly and decide whether or not this is a goal worth pursuing their situation. Here are a few factors that financial advisers should keep in consideration when exploring ‘to probate or not to probate’ for their clients.
Cost Reduction: Avoiding the probate process can save the estate money. Generally speaking, probate costs include everything from attorney fees, filing fees, and compensation for ‘personal representatives’—or executors. There are certain states that impose fees or costs based on the assessed asset value that is subject to probate.
In other states, these filing fees are based on the type of paperwork required by the courts. If there aren’t any assets to be distributed that are subject to probate, these costs—which can be exorbitant, can be reduced or even eliminated. It’s important to explain to clients that avoiding probate doesn’t mean that you can attempt the process without attorneys or other advisors when someone passes. It just means that the client can avoid specific court-imposed costs and fees.
Ease for Families: A large majority of your estate planning clients will state that their primary goal is to ensure that the process is simplified for their family when they die. They prefer to minimize expenses and stress for their families as much as possible. If you have clients that express this desire, you can make sure that they are informed about probate—avoiding it can decrease the time for certain assets to become available to their heirs. This lessens the steps necessary to transfer ownership of these assets—reducing costs associated when settling an estate.
Ensuring Privacy: Most paperwork filed with the courts is held in public record—anyone can see the copies of a client’s will, and information about the value of the assets that are subject to probate. Additionally, the probate process requires public notice to all individuals deemed to be interested parties under most state’s laws. If a client desires to disinherit specific relatives or desires privacy upon estate distribution, avoiding probate can help to achieve these goals.
Avoiding a Contested Will: There are plenty financial advisers that have clients who wish to disinherit a relative for one reason or another. If this is the case, ensure your client is aware that avoiding the probate process can decrease the likelihood that their estate planning is contested. Probating a will requires court-ordered notice, but transferring assets through a trust or by beneficiary designation doesn’t require public notice. Additionally, depending on the state of your client, these non-probate distributions of property may be different and more difficult to follow through on.
Less Administrative Work: When you successfully avoid probate, it lifts an administrative burden off of the shoulders of your clients. You may need to change the ownership of accounts, the beneficiaries may need updating, and the real estate conveyed through the use of deeds. These all require time, energy, and money—fees, charged by the courts. Many clients find the administrative efforts exhausting and time-consuming. Financial advisors can help ease the burden on their clients by guiding them through this paperwork and quarterbacking the process to complete everything in a time-efficient manner.