When probate attorneys and financial advisors talk about probate with their clients, they will often focus on the cost and time associated with going through the estate administration process. The cost of probate administration varies depending on a myriad of circumstances, but there are factors that can make the administration process even more costly (all other things being equal), and you should be aware of them when planning for your estate. Here are 3 examples
Life Insurance for kids – But, WAIT, Life insurance passes outside of probate right? Well, yes, it passes outside of the probate process if there is a valid beneficiary designation. BUT, you probably won’t be naming any minor children the beneficiary of a life insurance contract. You may, however, be naming a trustee of a children’s trust as the beneficiary. If you name a Trustee of a children’s trust in your Will, you have just essentially forced your life insurance through probate.
The Potential Solution: Talk to your estate planning attorney about a Revocable Living Trust with continuing children’s trust provisions.
Small Business Interests – Ask yourself a couple of questions… 1) – do you really want to give the Probate Court authority when it comes to handling yourBusiness when you pass away? 2) – do you really your spouse, kids, and/or business partner(s) to have to deal with theProbate Court when it comes to running your business or selling it?
The Potential Solution: Talk to your estate planning attorney about a Revocable Living Trust and a Buy-Sell Agreement + Business Succession Plan.Vacation Homes – If you have real property in another State, you are most likely going to have to go through probate in that State as well absent proper planning. Remember, even if you hold property jointly with your spouse, you are probably only postponing probate until the death of the second spouse. This means additional costs that may be unnecessary.
The Potential Solution: Talk with your estate planning attorney about a Revocable Living Trust and titling issues that may come up in each State in which you have property.
I hope this information is helpful. If you would like to discuss any of these issues with a probate attorney or an estate planning attorney, you can get our contact information by clicking here.