A major purpose of estate planning is to avoid probate. But what is probate, and why do you want to avoid it?
Probate is actually Probate Court. Probate Court is the division of Common Pleas Court, in Ohio, that deals with anything to do with wills, estates, guardianships, trusts, etc. When someone passes away and has not done proper estate planning, then there assets transfer either by will or, if there is no will, by the laws of the state of Ohio. The whole process is then babysat by the Probate Court. This sounds relatively painless, so why do I want to avoid it?
The first reason that you want to avoid the probate process is time. It can be a long process that can take anywhere from six months to over a year. The executor or administrator will have to account for all of the assets in the estate, pay all of the estate and deceased individuals bills, pay the beneficiaries, do a final accounting, and then close the estate. Further, if there is not enough money to pay all of the bills in full, then the estate is deemed insolvent, which may extend the process even longer.
The second reason is expense, the probate process can be expensive. The attorney who handles the probate administration is entitled to a percentage of the gross estate, this percentage is determined by each individual county but is usually in the neighborhood of 4%. It is not uncommon to see gross estates north of $200,000. With proper estate planning, more of that money goes into the pockets of the beneficiaries.
The third reason one wants to avoid probate is debts. In Ohio, in general, unsecured creditors can only make claims against assets that go through the probate process. With proper estate planning, virtually all assets can avoid the probate process, meaning the creditors won’t see a dime. An experienced estate planning attorney will make sure that your beneficiaries receive the inheritance that you always wanted them to have.
Finally, you want to avoid the probate process because its just a massive hassle. Dealing with the death of a loved one is stressful, dealing with their final affairs can be just as rough. With proper estate planning, cash flow is uninterrupted for surviving spouses, assets transferred, and beneficiaries get their money or assets in days or weeks rather than months or years.
Of all the reasons above, properly estate plan and avoid Probate Court to save your family the headache and hassle. Talk to an Estate Planning Attorney so that the transition is as smooth as possible for your loved ones.