WARNING – Wills Don’t Avoid Probate

by | Oct 26, 2021

WARNING – Wills Don’t Avoid Probate

By: Cristin Gerczak, Esq.

October 26, 2021

If you’re reading this, you probably have a vested interest to protect your family, assets, and business. You likely want to leave a proud legacy after you’re gone.

Many people think that a last will and testament will prompt their assets to circumvent the probate process. Unfortunately, this is one of the top misconceptions about estate planning.

How Not to Avoid Probate — Part 1

Let’s review a real life example.

You own a business, and that business is in your name. This signifies one of two situations: that you are the sole member of your business, or you are the sole shareholder owning all of the membership interest or shares of a corporation. Your last will and testament says that your business is going to pass to your brother and your sister equally — 50/50.

Guess what? In order for that split to be accomplished, your will must first be admitted to the probate court, and your business must go through the probate process. Before your beneficiaries receive any business interests or other inheritance, estate administration costs, fees, and attorney compensation will have to be paid from probate estate assets first.

Potentially, some creditors may have to be paid from probate estate assets, as well. Your business may not pass as smoothly to your brother and sister as you may have intended by naming them in your last will and testament.

Probate takes a lot of time to get through the process, and the rules have several nuances.  Additionally, probate costs a lot of money. A primary reason for creating an estate plan is to avoid probate and keep costs down for loved ones. That entails leaving more than just a last will and testament.

How Not to Avoid Probate — Part 2

Let’s review one more example to make this clear.

You list your son as the beneficiary on an investment account to receive the funds directly upon your death. If you pass away before him, you will have successfully avoided probate for that asset, and the proceeds would go to your son. But in this example, your son unfortunately passes away before you do. You never get around to updating your beneficiary designation on that investment account.

Now, a probate must be opened for that investment account. It must become an estate asset through the probate process before it can pass on to the beneficiaries.

The same aforementioned administration costs, fees, attorney compensation, and creditors will apply in this example, as well — and in any other probate situation. This will be the case even if you have a last will and testament designating an alternate beneficiary. A good plan takes into account the unexpected.

There are ways to avoid probate, however unique or complicated your situation may be. There is no cookie-cutter estate plan. There is no fill in the blank estate plan.

Working with an attorney is the best way to make sure this is accomplished correctly. We’ll help you achieve your estate planning goals and ensure that you feel accomplished and confident.

If you truly want to avoid probate, with all the time and cost involved, call us to get started today.

 

Author:
Cristin Gerczak, Esq.

Haimo Law
Strategic Planning With Purpose®
Email: cgerczak@haimolaw.com

YouTube: http://www.youtube.com/user/haimolawtv

 

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