Why Avoid Probate?

Most of us have heard that it's wise to avoid probate court, but we don't necessarily know why. In a nutshell, there are two big problems with probate:

• It ties up property for months, sometimes more than a year.
• It's expensive. In some states, attorney and court fees can take up to 5% of an estate's value. If your executor takes fees, that can take an additional bite out of your estate.

What Does the Probate Process Look Like?

While the probate process does involve a probate court, most of what happens during probate is essentially clerical. In the vast majority of cases, there's no conflict, no contesting parties, and none of the usual reasons for court proceedings. Probate rarely calls for legal research, drafting, or a lawyer's adversarial skills.

The probate attorney, or the attorney's secretary, fills in a small mountain of forms and keeps track of filing deadlines and other procedural technicalities. In some states, the attorney makes a few routine court appearances; in others, the whole procedure is handled by mail.

What Is the Cost of Probate?

The costs of probate include:

• Lawyer's fees
• Executor fees
• Probate court costs and filing fees
• Other expenses of guiding an estate through the probate process

For their services, both the lawyer and your executor will be entitled to fees from your estate.

Executor fees. It's common for the executor to waive the fee, especially if the executor inherits a substantial amount of your property anyway. But being an executor can be a fair amount of work, and some executors will choose to be compensated.

Attorneys' fees. In many states, probate fees are what a court approves as "reasonable." In a few states, the fees are based on a percentage of the estate subject to probate. Either way, a probate attorney's fees for a "routine" estate with a gross value of $400,000 (these days, this may be little more than a home, some savings and a car) can easily amount to $20,000 or more.

Other probate costs. In addition, your estate will have to pay court and filing costs, as well as other expenses incurred as you move through the probate process. For example, your estate may have to pay accountant's fees, appraiser's fees to obtain the value of certain estate assets, fees for obtaining certified copies of death certificates, the costs of sending important documents by certified mail, and more. These additional probate costs can add up quickly.

Reducing Probate Costs

One way to reduce probate costs is for your executor to handle the probate proceedings without an attorney ("in pro per" or "pro se"). But as a practical matter, that can be tough. Unless your estate qualifies for simplified probate procedures, the probate process in many states is quite complicated, and it can take a good deal of time, effort, and dedication to learn exactly which forms you need to file, and how. However, it's not impossible.

Use good do-it-yourself materials. In California, a good DIY probate book is available: How to Probate an Estate in California, by Lisa Fialco (Nolo). Wisconsin and a few other states have established pro per procedures, designed for people without lawyers. However, in most other states, you're unlikely to find comprehensive published materials or other help that make probate easily accessible to nonlawyers.

Use websites or practical guides to help. Without help, learning one's way through the morass of probate laws is likely to be difficult. But if you want to try, some counties provide tips for non-lawyer executors on their websites. Or your executor can get forms and instructions from an attorney's practice guide. These books are usually available at public law libraries.

Hire an attorney for less than the usual fees. Your executor can also try to get an attorney to probate your estate for less than the usual fees. If you have a particularly simple estate, or if your executor is willing to learn enough of the probate process to take on part of the work, this sort of arrangement might be available.

Avoiding Probate Costs

Given all this, it generally makes more sense to see if you can avoid probate altogether. But what does it mean to avoid probate? When people avoid probate, they are estate planning—that is, taking advantages of certain strategies during their lifetimes—to avoid the probate process when they die. This usually involves taking steps to make sure that their property can be transferred to their loved ones in some way outside of the probate process, such as by:

• making a living trust
• naming specific beneficiaries for bank accounts, retirement accounts, and insurance proceeds
• using a transfer-on-death deed to name a beneficiary for your real estate, if TOD deeds are available in your state
• co-owning property with "the right of survivorship" so that it transfers automatically to your co-owner at your death
• making gifts during your lifetime (but you'll need to file a gift tax return if you make a gift over $18,000 to someone in the same tax year).

For a more in-depth discussion of some probate-avoidance methods, see How to Avoid Probate.

Even if you don't have time to make sure that all of your property avoids probate, taking steps to avoid probate for significant property (like a bank account and your home) can still have a big impact. You'll reduce the amount of property that will be subject to probate—which will reduce fees and ensure that your beneficiaries get some of their inheritance faster. And in some states, reducing the amount of property subject to probate can help your estate qualify as a small estate that can use simplified estate procedures.

You can quickly and easily make a valid living trust online or using downloaded software, with Nolo's Quicken WillMaker & Trust.