If you ask any attorney about estate planning, they will tell you a trust is a good idea because it will help you avoid “probate.” But what exactly is probate, and why do you want to avoid it so bad?
Probate is the process whereby the court validates or “proves” the proper execution of a will (or if not will exists the court applies the laws of intestate succession). More broadly, probate refers to the whole process of proving the will and administering the estate. Although technically probate is an administration process, many attorneys will say that you “probate a will” instead of admitting a will to probate. Regardless, probate is the process you have to go through in order to finally distribute the assets of the estate. In your will, you’ll designate a person who will be the personal representative of your estate. The personal representative is the person in charge of opening your estate, filing your will with the court, and following the probate court’s rules throughout the administrative process.
One aspect of probate that many people dislike is that, when you administer an estate, the will becomes a public record. This means that anyone could read your will, and find out that you didn’t give anything to one of your children or decided to leave your entire fortune to your pets. Anyone with privacy concerns should consider other estate planning options than a will.
Another aspect of probate that is disliked even more than the privacy concerns is the fees associated with probate. A personal representative is entitled to a statutory fee under the Missouri Probate Code. The fee is tiered, so the personal representative would earn 5% on the first $5,000 of the estate, 4% on the next $20,000, 3% on the next $75,000, 2.75% on the next $300,000, 2.5% on the next 2.5% and 2% on all amounts over $1,000,000. Although the personal representative could waive this fee, it would seem crazy to waive the fee on those large estates. Further, and worse, the personal representative’s attorney is entitled to the same amount. This is why, especially for those who want to maximize the amounts they leave to their loved ones or for larger estates, a will may not be the best idea.
For smaller, or simpler estates, probate may not be such a bad thing. But, for bigger estates or for those who wouldn’t want their will to be public, probate really is something to avoid. You can avoid probate by using a revocable or living trust and properly titling your assets.