Probate
PROBATE is the legal process by which your bills are paid and your property is distributed when you die, based on what your Last Will and Testament says...if you have one. If you don’t have a Will, this is called dying intestate, and your assets will be distributed by the laws in your state.
LIVING PROBATE is when you cannot handle your own affairs when you are deemed incompetent or are a minor child. The court will step in and control their financial and personal affairs while they are not able to care for themselves until they recover. If a minor, the court will control their financial and personal affairs until they become a legal adult.
After incapacitation or death, PROBATE is the only way to legally transfer title to any titled property such as Real Estate, Bank, or Brokerage accounts, Cars, etc., when the owner cannot sign his or her name or if they are a minor.
PROBATE was created with the best intentions...to protect you, your property and your family. It has existed in one form or another for hundreds of years. Basically, it provides an orderly method of paying your last bills and transferring ownership at death. Under the direct supervision of the court system, it manages the financial affairs of an incompetent person or minor child.
If you don’t take action with the proper documents and planning now, probate can and probably will affect you and your family in at least one of 3 ways:
If you become incompetent and can’t manage your affairs (Living Probate)
When you die (Probate)
If your minor children inherit property (from you or others) (Court involvement)
YOUR FAMILY (Heirs) LOSE CONTROL
During PROBATE, your family or heirs may not be able to sell or liquidate property and assets without first getting approval from the courts...EVEN IF THEY NEED THE MONEY. The family or heirs lose control to the PROBATE PROCESS. They must live their lives within the restrictions of the PROBATE SYSTEM. This means that the executor must work in the “Courts Time” rather than their time. These hassles can be very frustrating to your executor, which is usually a family member. Is this what you really had in mind?
The time it takes to go through the probate process varies, but it is usually between 9 months to 3 years. In Pennsylvania, the average time seems to be about 11 - 13 months.
YOUR ESTATE IS PUBLIC KNOWLEDGE
Your will is recorded in the Register of Wills office and anyone, including sales people, can review what your worth was and who received what!!! Sales people review these wills and know that most people who just inherited money are good targets for a sale!
PROBATE CAN BE needlessly EXPENSIVE
The fees an attorney charges can vary, but in Pennsylvania, the recommended fee schedule or guidelines start at around 7% of the smaller estates and goes down from there. So, the smaller your estate is, the higher the percentage the loss may be. There are other expenses that are added to the attorney fees, such as probate fees, court costs, filing fees, publications/advertising expenses, appraisals and auction costs, bond fees, etc. Generally speaking you are safe to figure your GROSS estate will be depleted by approximately 7%-12%. Example: The Smiths had a home, and assets worth $200,000. The costs associated with PROBATE could be approximately $14,000 to $24,000 as long as the Will is not contested. (as many as 1 in 3 wills are contested). If the Will is contested, the PROBATE PROCESS could be drawn out for years and reduce the value of the estate by more court costs, attorney’s fees, etc. There are ways to reduce or eliminate these expenses and reduce the chances of problems with contests or challenges.
If you own Real Estate in more than one state, the entire process (and it’s expenses) will probably have to be repeated in each state in which the Real Estate is located.
In Pennsylvania, estates over $25,000 are usually probated.
We recommend asking your attorney what your total probate expenses will be, based on today’s value of your estate. GET IT IN WRITING!