Top 3 Reasons
To Avoid Probate
3 Main Reasons to Opt Out of Probate Court System in Wisconsin
1. Time Involved with Probate Court
Whether you have no Last Will and Testament, or you choose to form a Last Will and Testament, in both situations, your estate will need to go through the probate court system after your death in order to get any probate assets to your heirs. Common example of probate assets can be real estate, personal property (such as antiques, jewelry and household furnishings) and financial assets such as cash, gold, coins, or stocks and bonds not held in a brokerage account, or any financial account without beneficiary designations properly filled out to avoid probate. The main reason I hear clients express frustration with the probate court system when they come to my office is the amount of time it takes to settle an estate through the probate court process. By state statute, the probate court process can take from 6 months to two years, however for a probate which is the subject of estate litigation, or has unresolved issues, the judge has discretion to extend the time allowed, and in these situations probate can last longer than two years.
For this reason we favor private non probate administration of assets and estates at my office whenever possible. We will work with you to find ways to avoid probate on as many assets as possible if this is your goal. When putting together a probate avoidance plan, the primary tool we often use to avoid probate on most of your assets is a revocable living trust. A revocable living trust can be set up during life, and assets can be titled in the trust's name. The trust can then outlive you, and have rules inside it about what happens to your assets after your are gone. The trust can handle all of this as a private administration without the public probate court process.
2. Probate Court Expenses
Another major reason many people choose to avoid probate is the expenses involved with opening a probate with the probate court. When you estate passes through probate, the probate court assesses a fee on all assets subject to administration by the Court. What this means is your Personal Representative must make a list of all the assets owned at your death, and assign a reasonable fair market value to each asset. This includes not only real estate, but personal property such as tools, farm implements, jewelry, housewares, etc. Some of these items may have significant value while others do not, however the amount of work involved with trying to catalogue, inventory and assign value to each item of tangible personal property is often an enormous effort in and of itself. The probate court then assesses a fee equal to .2% of the probate assets, and charges this to your Estate as a filing fee to open the estate. This is the Inventory Filing Fee, and there are other fees as well. You can think of this as a fee of $500 charged on every $250,000 in net assets of the estate. You can see that the more assets you have subject to probate, the higher this inventory filing fee will be.
Because of all of the work involved with probate, your Personal Representative is entitled to a fee of 2% of the net value of the Estate as their fee for services for administering your Estate. Your Personal Representative is also allowed all "necessary expenses in the care, management, and settlement of the estate." See Wis. Stat. 857.05. You can make this fee higher or lower in your Will if you and your Personal Representative agree to this, however for people who pass away without a Will, there is no option to alter this fee since they did not put a Will in place before they died. In that situation, the Probate Court could choose to make the fee lower if the Personal Representative is "derelict in their duties" or the Probate Court may choose to award a higher fee in situations "cases of unusual difficulty or extraordinary services as the court determines reasonable." See Wis. Stat. 857.05.
In addition, because of all of the various forms and processes involved, the Personal Representative will often hire a lawyer to help with filing all of the probate court paperwork necessary to open the Estate. This paperwork is significant and takes most lawyers many hours to fill out, complete and file with the probate court. My office bills hourly for this type of work, as do most attorneys, because the time involved can add up quickly and varies from estate to estate depending on the size and assets involved with the probate administration. For this reason, if you choose to go through probate court, most lawyers say you should plan to spend 3-6% of the value of your Estate on probate court fees, Personal Representative fees, attorney fees, and expenses.
3. Probate Court Paperwork & Public Process
If you go through the probate court process there is a significant amount of paperwork that must be filed simple to open the Estate. You must provide the court with an inventory of all items in the Estate as discussed above, and in addition you must give notice to heirs and potential creditors of the Estate. There is not one single form you file with the probate court, instead it is many forms, and can vary exactly which forms to file depending again on the assets and heirs involved with the Estate. For this reason as mentioned above, many people who have not gone through a probate process before choose to hire a lawyer to help them with this process. While a lawyer like myself, or someone else can help you with the paperwork, we cannot make a government process that is not designed for speed and efficiency go any faster for our particular client. So please understand if you hire use we will do the best we can to help you, but we cannot speed up the 6 month to 2 year timetable laid out in the statutes for opening and closing a probate estate. In addition, there are certain statutory deadlines and notice periods which must be followed, so even if you are very efficient and work quickly with your lawyer to open the estate, there is a certain amount of time involved that cannot be reduced. Finally, the paperwork is required by the Court whether you have a very simple Estate or a complex estate. Any probate estate with more than $50,000 in probate assets in Wisconsin must go through the probate court process. For this reason, if you have probate assets above this amount, we often suggest looking at ways to avoid probate on your assets, and opt for a private administration of your estate instead.
By definition, probate court is a public process, so after your die your Last Will and Testament becomes a public document that must be filed with the Probate Court process. While your Will is private during life, it becomes public after death. This is another major reason many folks choose to avoid the probate court process, in order to keep the administration of their estate a private affair after your death. As mentioned above when we use a trust as the primary probate avoidance tool for your estate, we can keep your affairs private both during life and after death. There is no statutory requirement to file a trust with the probate court after your death. For this reason many public figures and celebrities who plan ahead use trusts to avoid the public administration of their estates after death.
These are the three major reasons I hear from clients why they want to avoid the probate court process completely after death. There are many additional reasons other than those listed above, this is just a start of the many reasons why many folks choose to avoid probate court. You can watch my video above for a more in depth explanation of this entire topic and as always, if you have any questions we can help you with, we are here to help. If you are interested in learning more about ways to avoid probate on your estate, we suggest you take a look at our automated estate planning video guide below. This guide is free and can be accessed by you no matter what time of day you are reading this article. If you are ready to start your estate planning process with our office, you can easily schedule and book your Flat Fee Estate Planning Consultation to discuss your estate planning situation in detail with our office at this page.
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