is a lot like bankruptcy
except that you don't get a second chance to start over again. Like the trustee in bankruptcy,
representative in a probate proceeding has a duty to marshal the assets of your
estate, identify all known creditors, pay legitimate claims and then distribute
the remaining estate to the appropriate parties. In both cases, there are strict rules for
determining the priority of claims and the order of distribution. Typically, the attorneys get
paid first, then
the other creditors and finally, the beneficiaries get what's left.
provides peace of mind
no question that probate
can be a long and costly process. So why
do it? The main reason is to bar claims
against the estate not filed within 3 months after publication of a Notice to
Creditors. If you don't go through
probate, your heirs or beneficiaries may be liable for creditor's claims for up
to two years after your death. Probate
provides peace of mind by dealing with the claims of creditors before anyone
gets too attached to your money.
a trust avoid creditors?
people seem to think the
creditors will get nothing if they put everything in a living trust. That is simply not
true! By law, the trustee of a revocable living
trust has to fork over whatever it takes to pay legitimate claims of the
grantor's creditors if the assets subject to probate administration are not
sufficient to pay those claims. The
trustee also has to file a Notice of Trust with the court of the county having
jurisdiction of the grantor's estate and/or where the grantor was domiciled at
the time of death.
essential to fund living trusts
A lot of
people have turned to
living trusts as a good way to avoid the expense and delay of probate. While it is certainly
true that living trusts
can be an effective alternative to probate, many people fail to accomplish
their main objective by forgetting to put all their assets in trust. In that case, the missing
assets may have to
be distributed by will or intestate succession and that means you are back in
Probate Court again. That is why many
attorneys recommend a "pour-over will" to sweep up any missing assets
into the living trust.
is “summary administration”?
several ways to reduce the
cost and delay of probate. For example,
you don't need a personal representative if the total value of your estate is
less than $75,000.00 and all your beneficiaries or heirs at law agree on who
should get what. This is called
"summary administration" and allows for the immediate distribution of
all listed assets to your designated beneficiaries or heirs at law.
planning saves turmoil later
estate does not qualify for
summary administration, you can still reduce some of the cost and delay of
probate by proper planning. Having a
well-drafted will or trust is a good way to start. Asking a trusted friend or family member
serve as your personal representative can save a lot of time and money as well.
Think about who you might want to have as your personal representative and
remember, the law will pick one for you if you fail to act. You may get stuck
with Uncle Charlie or Cousin Bill as your personal representative if no one
else wants the job.
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