A very common statement that I almost always receive from a client is, “I do not know what probate is, but I know it’s bad and I know I need to avoid it!” The truth of the matter is that probate exposes your entire financial affairs to the public. Probate in Tennessee can be very bad, can be very long, and can be very expensive.
In the simplest of terms, probate is the process of your assets passing to your family and loved ones after your death. If you have a Will in place when you die, you are said to have died testate, and so long as your Will is valid, your assets will pass to your family and loved ones in accordance with the customized provisions of your Will. If you do not have a Will when you die, you are said to have died intestate. In this circumstance, your assets will pass to your family and loved ones according to Tennessee law.
However, probate can last anywhere from six months to two years in length, and the cost of probate can be in excess of $20,000 when it is all said and done. For example, when you die, all of your probate assets will be frozen, and your family will have to go through a painful court process when you die. Most likely, your family will have to hire a law firm to take them through the court process to gain access to your assets after your death. Just a few of these costs will include court costs, attorney fees, executor compensation, appraisal fees, and miscellaneous other costs. Now, it is important to note that only your probate assets will be subject to the probate process. The most common probate assets include your personal property, your house, bank accounts, certain investment accounts, certificate of deposits, and your car. Now, just imagine if all of these assets were frozen and your loved ones could not access them until the probate court says so (six months to two years from now). How would your loved ones pay for your funeral and other final expenses?
A very common way that Tennessee families are avoiding probate is by establishing a revocable living trust. This is a customized document that all of your assets will transferred ownership to prior to your death. For instance, instead of you owning your house as Eric Smith, you will own your house as Eric Smith as Trustee of the Eric Smith Revocable Living Trust. Therefore, if all of your assets are titled in the name of your trust when you die, then you do not own any assets in your name. As such, all of your assets would immediately pass to your loved ones in accordance with the trust agreement and not according to your Will and/or Tennessee law, requiring your family to go through the probate process first.
In addition, many lawyers love probate! Why? Because, it means a long and expensive court proceeding. Also, this usually means a large fee for the lawyer to handle the probate of the estate.
If you have questions regarding estate planning and avoiding probate for your family when you are gone, please register for one of our many free events held each month throughout the greater Nashville area. I can assure you that most, if not all, of your questions will be answered.