Probate

The very utterance of the word "probate" evokes images of a slow, costly court process and, in the case of large, controversial estates, headlines and appearances on "Court TV." Best-selling books, seminars, and articles have been devoted to ways to avoid it, especially through the use of living trusts. Yet, is probate all that bad for most families? Are the cures sometimes worse than the disease?

Probate is the legal procedure for validating a will. Once determined, the property owned by the person who died is distributed to the heirs according to the provisions of the will. (If the will is found invalid or there is none, the court will determine the heirs. The institute of Certified Financial Planners offers a quick guide to deciding whether or not it is worthwhile to avoid probate.

Consider going through probate if:

• Most of your assets avoid probate. A large portion of your estate may not even fall under the control of your will. Property that does not pass through probate includes items owned jointly with right of survivorship (such as bank accounts, home, cars) or has a named beneficiary such as life insurance death or retirement plan benefits, individual retirement accounts, and annuities.
• You have a small, simple estate. it most likely will zip through probate, or at least go through it as f as through a trust that avoids probate.
• Creditors aren't a problem. Creditors usually must file claims against a probated estate within six months. No time limits exist for trusts.
• You don't expect your heirs to fight over the estate. Contested wills can drive up court costs and result in delays.
• Alternatives are not worth the cost. Setting up and maintaining trusts and other probate-avoiding devices can be more cumbersome and expensive than court costs, especially if you have a modest estate.
• Estate taxes are not a concern. If your estate is valued under $600,000, there are no estate taxes. Some probate-avoiding procedures, such as living trusts, don't avoid either income or estate taxes, anyway.
• Consider avoiding probate if:
• Your have a large, complex estate. Distributing property owned in more than one state, for instance, is complicated under a will. Setting up trusts may be cheaper in the long run than attorneys' fees under probate.
• You want to avoid publicity. Estates passed through trusts generally can be done off the public record, though not in all jurisdictions and not with all types of property. (Real estate must be publicly recorded, for example.
• Estate taxes are a concern. Some estate-planning devices that avoid probate, such as specific types of trusts, can reduce estate taxes.
• Your heirs may dispute our estate. Trusts aren't foolproof in the case of a fight, but they generally are stronger than wills.
• You may want or need professional management of your estate after you die. A will won't do that for you.