Understanding (and Avoiding) Probate: Part 1

Our legal system is a highly contentious and expensive experience for those who are caught up in its gears. All too often, it promotes bitter compromise over true justice. That reality is especially true for those who are forced into probate court after the death of a loved one.

Probate is a legally mandated process where a judge evaluates and then decides how to distribute an individual’s assets to heirs or beneficiaries when they die. Those assets can include everything from bank and investment accounts, to property, physical assets, and other less-easily-quantifiable items of value like art or airline miles. The entirety of those assets constitutes your estate—and reviewing and apportioning that estate to creditors and inheritors is the goal of probate court.

If the decedent has prepared a will, a probate court will work with a named executor to oversee the administration of that will. If no will exists, the probate process will still proceed, but often becomes more complex and potentially problematic. Regardless of whether a will exists, the probate court will work to ensure that all the decedent’s debts have been paid and that all assets have been distributed in a manner the court views as equitable.

Probate is a messy, expensive, and potentially contentious process. The first problem is that probate is a very public legal proceeding. Any and all assets (and possibly personal or family dirty laundry) will be identified and made publicly available to anyone who is interested. Alleged creditors will likely come out of the woodwork and any alleged heir who knows you left assets behind can attempt to lay claim to them. Probate also takes time. Because of legal requirements for notifying potential creditors, probate lasts a minimum of four months in the State of Michigan. But it can and often does run longer—sometimes much longer.

Probate court is not only a place where petty grievances and family drama play out, but is also often the source of that drama. Grief and greed can be a potent and unwelcome cocktail, and far too many relationships have been ruined and families destroyed by hurt relatives fighting over what they perceive to be the dying intentions of a parent, sibling, or child. Heartache, pain, and anger can fuel dysfunctional revisionism by family members or friends who feel scorned—and all of it plays out in a public courtroom with lawyers controlling the strings. Unfortunately, and unsurprisingly, those disagreements can run up the price tag. It’s not uncommon for probate to cost a minimum of $8,000-$10,000 dollars, with bills possibly running into the hundreds of thousands of dollars when the process becomes especially contentious and chaotic.

Keep in mind, all this delay, expense, uncertainty, and potential conflict is taking place during a time when vulnerable family members are grappling with the loss of a loved one. The unfortunate truth is that no one wants to go to probate. It’s a terrible place to be. Probate is often run by an overburdened and inefficient court system. It’s a time-consuming, frustrating process, a procedural nightmare with no clear outcomes, guided by rules that are clinical and coldly calculating, with no guarantees that your wishes will be followed regarding the disposition of your assets.

But here’s the good news: there is a way to avoid probate all together. When you put all of your assets into a TRUST (as opposed to a WILL), those assets are shielded from the probate process. Shea Law uses the expertise and counsel of our experienced estate planning attorneys to design and implement TRUST documents which help clients avoid public scrutiny and sidestep the potential family drama that so often leads to discord and distress. In Part 2, the follow-up article to this piece, we’ll discuss how a trust can work to make probate less stressful and less costly, protecting your assets and your family. We will also review more generally what the estate planning process looks like, presenting a detailed overview of common missteps and a road map for how Shea Law can help unlock a painless and peaceful alternative to the otherwise messy probate process.