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Should You Consider Avoiding Probate?
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Avoiding probate, like avoiding taxes, is usually always preferable. Most attorneys and financial professionals would advise avoiding probate and you should consider it for the following reasons. Probate is a public procedure where your debts, assets and your will become part of a public record. The expenses of probate, including the statutory commissions schedule, set forth below, may exceed than the cost of an estate managed and distributed through a living trust. Also, trust distributions usually can be made to beneficiaries quicker although there are provisions for preliminary distributions to beneficiaries before a probate estate has been finally distributed. In a probate, the personal representative and the attorney for the estate are each entitled to be paid statutory commissions for their work during a probate. These commissions are paid from the estate which would otherwise pass from probate to the beneficiaries. Although these commissions are set by law, commissions can be a significant expense because they are generally based on the gross value of the estate (before debts, taxes and other expenses are paid). The statutory commissions payable for ordinary services to the personal representative and the attorney are calculated as follows:
If a decedent dies with a $1,000,000.00 estate, the statutory commissions for the personal representative and the attorney for ordinary services are $23,000 (= $ 4,000.00 + $3,000.00 +$16,000.00) each, i.e. $46,000 total or 4.6% of the gross estate. This may or may not be well earned depending on what work the estate required performed. Additional fees can be requested for extraordinary services like asset sales, litigation matters or any other extra activity and there is no limitation on their amount except they must be just and reasonable. If there is no need for court supervision of your estate, probate can be a more expensive and slower process for distributing your estate to your beneficiaries. However, if you suspect that there will be disputes after your death, the court supervising your estate is immediately available to determine such disputes. In addition, your executor or administrator must report to the probate court and account for all financial transactions which must be approved by the court. Next: What types of property pass outside of probate?
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