Estate Planning 101: Top 3 Reasons to Avoid Probate

In this episode of our Estate Planning 101 series, Attorney Thomas B. Burton discusses the probate court process in depth, and uses his whiteboard to illustrate the Top 3 Reasons to Avoid Probate. Attorney Thomas B. Burton discusses the time, and expenses involved with the probate court process and discusses the top three reasons people chooses to forego the public probate court process completely and instead opt for private family administration of their estate.


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Hello I'm attorney Thomas Burton, I'm an estate planning attorney here in Wisconsin and today I want to talk to you about the top 3 reasons I see for avoiding probate.


Now there's many reasons to avoid probate but these are the top 3 that come to my mind and what I see most frequently with my clients. Now probate, let's define the term initially, is the court ordered process whereby they administer and distribute your assets after your death. If you don't have a will or you have a will, you're going to go through probate. Think of probate equals a will, meaning you created a will, created your own plan or no plan, what I call no plan either way you're going to go into probate, okay? But if you create a will, the upside is you can create your own plan for who gets your assets after you're gone. If you don't create a will, then no plan, it's going to go according to the Wisconsin statutes of intestacy. So when we're talking about probate, we're primarily talking about someone who passes without a will or with a will which is designed, must be filed with the probate court upon their death.

So turning now to the top 3 reasons why you might want to avoid probate, the number one reason I hear from clients and I see, is time. The time involved with a probate can be significant and often it's surprising the folks who encounter it for the first time - how long it takes. Now, in Wisconsin by statute, it's from 6 months to 2 years, maximum, however a judge can extend it longer than 2 years if necessary, for instance, there are certain estates where people are fighting over assets that have been in probate court for many, many years. Now the time 6 months to 2 years, I would say is more of an accurate assessment of the time it will take. 6 months is probably quite fast, that's the minimum I've ever heard of. Plan on more likely, 12 to 18 months for your estate in probate. This means, it takes time for someone to get appointed by the court as personal representative for your estate, personal representative is what we call, in other states they call them the executor of the will, in Wisconsin we call it the personal representative and whether you have a will or no will, you have to have a personal representative appointed to administer your estate with the probate court and they will be the person taking care of all the paperwork with the probate court and again, that process will take from 6 months to 18 months, to wrap it up. To open the estate, process all the assets, file the inventory and ultimately close it. There's many other things that go into the probate process, I'm not covering them today but just so you know, that's the time involved. Now with the court system, they will deal with your assets if you have, if they have to. So that's where probate comes in but it's not necessarily their first priority. Their primarily concerned with public safety, meaning the criminal case load often fills a lot of court docket. So probate is part of the court system but it's not as high a priority if that makes sense and there is time involved. In Wisconsin, it's not terrible but again, it's not as quick as a private administration of your affairs. So the number one, when my clients walk in, if they've been through a probate for a friend or loved one, they often tell me they never want to go through another one and when I ask them why, one of the big reasons they bring up is the amount of time and effort that went into it.

Now the second big reason to avoid probate is the expense. In Wisconsin we do not have crazy high probate court fees like some states, for instance, I've heard in California, they're very high but we still do have the fees here and they're imposed both to open the estate and on the total value of the assets passing through the court. The more assets you have, the more you're going to pay just to have it pass through the probate court process. That doesn't include the probate court expenses, are one factor but you also have to think about the fee to pay your personal representative. In Wisconsin, by statute, it's 2%, if you create a will, you can alter this or a trust, you can alter this but if you go through probate with no will, 2% is the statutory amount and it's often the amount people take under your will, if your will is silent on this. In addition, you have attorney fees and court costs. Most folks will not attempt to do a probate by themselves because it's not something you do every day and there's a lot of paperwork involved and then you have the court fees and costs in addition to publication fees things like that. So you should plan to spend 3-6% of the total value of your estate going through the probate court process. That's why, if you own real estate and other assets, it's often a good idea to avoid probate as much as you can and a great way to do this is through revocable trust planning. So the expenses, you look at your own situation, they add up the more you have but even smaller states, significant expenses because there's a certain amount that has to be done for every estate, that's open with the probate court.

Now the third reason I hear is the paperwork. If people went through a paperwork, excuse me, a probate once before, they will tell me about the paperwork. There is an endless amount of paperwork with a probate estate, in fact, it's even more in my experience than the legal system in general, if you know what I mean, in general legal issues involve paperwork but probate court has anywhere from 8 to 12 different pieces of paper or more, that must be filed, just to get this estate open and going, separate forms. There's a form for this and a form for that, one form to get appointed as personal representative, you need to be issued the letters testamentary, you need to name the heirs, you need to give notice, all these different things and there's lots of different forms. Now can the average person do this on their own? They can if they choose to invest the time in learning the process but for most folks, it doesn't make sense for a one-time affair, so they will usually hire a lawyer like me or someone else to help them. It's more efficient for someone who's done it before. There is a giant booklet on the probate register, I think it's about a hundred pages that shows you how to do it and for those who are willing, you can do it that way but like I say, I'm telling you, what I hear from my clients, they often tell me the paperwork, they couldn't believe how much paperwork there was to go through and I should point out the paperwork doesn't get necessarily less for a smaller estate. If it's the biggest state with millions of dollars, there's lots of paperwork. If it's a small estate, with just, let's say a hundred thousand dollars, there's still lots of paperwork. It doesn't, it's not proportionate, so the paperwork burden is significant and that adds into the time and expense because if you're working with professionals and the court, you need to pay your attorney to help file all that paperwork and then the court fees of course, assessed on the assets that go through probate.

So I wanted to create this video on the top 3 reasons you might want to avoid probate and these are what I hear most often from my clients - the time, the expense and the endless amount of paperwork involved, not to mention, it's emotionally taxing dealing with all of this right after a loved one passes away and if you have no plan or a will plan, you often have to do it fairly fast because you feel a need to get access to some of the funds, to pay for the cost of the funeral, last medical expenses, burial etc. At my office, we focus on avoiding probate on as many assets as possible and our primary vehicle, we often use to do this is a revocable living trust. So if you're interested in learning more about avoiding probate, check out some of my other videos on the ways to do that.

Also if you're interested in figuring out whether a will or trust makes sense for you, I have a one-page guide, it's a decision tree type guide, I learned visually, so it's sort of like this, walks you through the steps. I'll put a link in this video, you can click the link, enter your email and the guide will be sent to your inbox. That might be helpful to review as well. I wanted to use the whiteboard today to do a little bit more of an explanation of some of these issues, I hope it was helpful to you on your estate planning journey.


Thanks for tuning in and we'll see you next time.


© 2020 Burton Law LLC. All Rights Reserved. Transcript and captions provided for ease of access for the hearing impaired. For questions about this topic, or to suggest a topic for a future blog post, please contact the office.

© 2020 by Burton Law LLC

 

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