I was recently speaking with a client from the Nashville, Tennessee area who asked me “Is Probate Bad?” This is a question that is always the subject of debate depending upon whom you ask.
There are financial gurus out there who say that probate is terrible and that everyone should have a living trust, there are attorneys who say that it depends, and there are people who say living trusts designed to avoid probate are a total and complete waste of money.
When this client asked me I told them, “well, it depends.” (Sorry for the typical lawyer answer). As I continued to speak with this client I informed them that whether probate will be bad will depend entirely on your family wealth transfer goals and what you are looking to protect for you and your family.
First, I explained that probate is a public proceeding. Every asset that you own, every debt that you owe, whom you owe money to, who the attorney is that is representing the family, and what he or she is charging will become public record. This means, anyone can go down to the court house and learn everything about you, your family, and your financial situation at death.
Second, if you die with a valid will in place you really have nothing. A will is not valid until a judge says it is. What I mean, is that a judge must state that the will is valid after he or she has had a chance to review the will. The Last Will and Testament, will need to be filed with the court, which also becomes public record. This means that anyone can go down to the court house and read your last will and testament and see who you left your property to, who your executor is, and even worse, to whom you are not leaving your property.
Third, probate will cost your heirs and loved ones some money. Probate will cost you anywhere between to 3% to 5% of the gross value of the estate in the form of costs and attorney’s fees. As an example, if you have an estate the size of $350,000 (very common when you add up the real estate and all the other property), costs and attorney’s fees can range between $10,500 and $17,500.
Finally, probate will take some time and your loved one’s inheritance will be tied up until the probate court proceeding is finished. In Tennessee, probate will last a minimum of four months, but can last upwards of two years or longer.
Therefore, when this client asked me whether Probate was bad, I asked them, “well, it depends what your definition of bad is? It depends on your family wealth transfer goals. Also, it depends if costing your loved ones 3% to 5% of the value of the estate and having them wait 4 months to two years or longer to gain access to their inheritance is important to you. If it is, then I would suggest that a probate avoidance strategy is something you should explore.”
However, before you meet with any attorney, you should have a list of questions and items to discuss with the attorney, including your family’s wealth transfer strategy and goals.
If you have questions regarding estate planning and family wealth transfer planning, then I encourage you to download one of our Free Books on Family Wealth Transfer Planning to the left of the screen. If you are ready to schedule your Family Wealth Transfer Planning Meeting, please contact our office at (615) 490-0477.
As always, we are here to help!