Probate Myths vs. Probate Reality: Tips For Families
Everyone says to avoid probate. It tends to get framed as slow, expensive, and something to be engineered around at all costs, using trusts and other planning tools. For most families, however, probate is a manageable public process that exists for good reason. Ideally, what does need to be avoided is probate litigation, which is not the same as probate. Read on for help understanding what’s myth and what’s real about probate and probate litigation.
The Truth About Probate
Probate doesn’t have to be the ordeal its reputation suggests. For most families, it’s a structured, public process designed to protect everyone with a stake in the estate of someone who has died. Essentially, probate is the court-supervised process of settling the financial affairs of the deceased. Typically, probate includes validating the will, notifying creditors, paying debts, and distributing what’s left to the heirs. It’s public and it takes time, but it exists to keep the process fair and transparent for everyone: heirs, creditors, and the court alike. Most families actually move through probate without much drama. Here are five myth-busting truths about probate from the American Bar Association (ABA):
- Probate is the formal legal process that gives recognition to a will and appoints the executor or personal representative who will administer the estate and distribute assets to the intended beneficiaries.
- The laws of each state vary, so it is a good idea to consult an attorney to determine whether a probate proceeding is necessary, whether the fiduciary must be bonded…and what reports must be prepared.
- Most probate proceedings are neither expensive nor prolonged….
- The basic job of administration and accounting for assets must be done whether the estate is handled by an executor in probate or whether probate is avoided because all assets were transferred to a living trust…
- Many states have simplified or streamlined their probate processes….There is now less reason to use probate avoidance techniques….
With proactive organization and clear, honest conversation in families, it’s even possible for many types of assets to be passed on to designated beneficiaries without going through probate–and without needing to be placed into a trust. According to the ABA, property that can bypass probate includes: “life insurance or retirement plan proceeds, which pass to a named beneficiary by designation rather than pursuant to your will, and real estate or bank or brokerage accounts held in joint names with right of survivorship.”
To avoid unintended problems related to these assets, it’s wise to keep all beneficiary designations up to date. Doing so is frequently a neglected foundational step in estate planning—and a mistake that can lead to conflict and even probate litigation.
Understanding and Avoiding Probate Litigation
Probate litigation is often confused with probate, but with some solid basic planning and organizing, most families manage to avoid probate litigation–which is a good thing.
Probate litigation only happens when there are challenges and conflicts related to the affairs of the deceased that require court intervention. For example, probate litigation could occur due to:
- Will contests — a challenge to the validity of the will itself, often based on claims of undue influence, lack of capacity, or improper execution.
- Disputes among heirs or beneficiaries — disagreements over how assets are being divided or how the will should be interpreted.
- Breach of fiduciary duty claims — allegations that the executor or administrator isn’t fulfilling their responsibilities properly.
Unlike the ordinary (and orderly) process of probate, probate litigation can be slow, costly, and emotionally difficult for everyone involved. Here’s the good news: probate litigation is relatively uncommon — most probate cases move through the standard process without ever becoming contested. To learn more about probate litigation–and how to avoid it, visit Estate Planning and Elder Law Attorneys.
Good To Know: Trusts Are Not Magic Wands
Although trusts can be a helpful way to protect and designate assets for care giving purposes as well as for loved ones, they are not always necessary, or cost efficient. Attorneys at the ABA offer these considerations related to using a living trust to anchor an estate plan:
- While it is true that the property passing under the terms of a living trust upon your death will “avoid probate,”… there may or may not be actual value in that result.
- A properly drafted will in many states can eliminate some of the steps otherwise required in the probate proceedings.
- …Much of the delay and red tape customarily associated with probate is a result of tax laws and tax filing requirements, which cannot be eliminated through a living trust and the avoidance of probate.
- A living trust can almost never totally avoid probate, and a simple will is needed to “pour over” to the trust any property that has not been transferred to the trust….
- Property that passes at death through a revocable living trust must be transferred to the trust, administered by a trustee who may or may not charge fees, and then transferred out of the trust to the beneficiaries.
The Executor’s Role — and Where a Probate Bond Fits In
Even though probate is an ordinary process, it does require someone to handle the associated tasks, and that job usually falls to an executor (if there’s a will) or an administrator (if there isn’t). Some states also refer to the person designated in probate court to close out the affairs of the deceased as a personal representative.
Regardless of the nomenclature differences, the individual charged with completing the probate process is considered a fiduciary, with legal obligations to put the affairs of the estate and beneficiaries ahead of personal interests. It’s a role with real responsibility: following probate protocols, inventorying assets, paying valid debts and taxes, keeping accurate records, and eventually distributing what remains to the rightful heirs.
Courts don’t take it on faith that closing out the affairs of the deceased will go smoothly. That’s why they can require the executor or administrator to obtain a probate bond before they’re allowed to act. A probate bond — sometimes called a fiduciary bond or executor bond — guarantees that the executor will carry out their duties honestly and in line with the law. In case estate funds are mismanaged, a probate bond gives heirs and beneficiaries a way to recover what was lost.
Needing a probate bond isn’t a judgment against the executor or a sign that something’s wrong. It’s a standard safeguard required by courts to protect everyone in the process — including the executor, since it shows they’re operating with built-in accountability.
If you’ve been named an estate executor or administrator and a probate bond is required, Colonial Surety Company offers a quick and reliable online bonding service. We’re rated A (Excellent) by A.M. Best, listed by the U.S. Treasury, and licensed in all 50 states.
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