Interference! Two Tricks to Keep the Probate Court out of Your Estate

Photo by leah hetteberg on Unsplash

It’s easy to see why you might want to avoid court involvement in your estate for financial reasons, knowing that probate will quickly get costly and time-consuming for those involved. For many, however, there is an emotional component to it as well. The idea of the distribution of your assets being debated in front of strangers in open court might not be such an appealing one.

If you’d rather the matters of your estate be kept private and your assets distributed to your loved ones rather than eroded by court fees, you’re not alone. Luckily, all it takes to get there is a proactive attitude toward planning your estate.

Court Interference 101

Two of the most common situations in which the court becomes involved in your estate are probate and conservatorship.

Probate: When an estate goes through probate, a court oversees the gathering of the probate assets, payment of any outstanding debts, as well as deciding whether a will is valid and who the deceased’s legal heirs are. The court ultimately determine who should receive the assets that are left after payment of debts, taxes, and costs.

Conservatorship: When someone experiences mental incapacity, documents in their estate plan can direct a trusted person to carry out that individual’s wishes for the situation. But if no such documents have been drafted, their business becomes the government’s business, too. A court proceeding called guardianship or conservatorship (also known as “living probate”) will be held to appoint guardians and conservators to manage the affairs of the incapacitated person.

Free Your Estate from Interference

Fortunately, it’s possible to avoid conservatorship and probate proceedings entirely through careful planning. Use of tools such as powers of attorney and trusts not only save you considerable fees and expenses, they also preserve your dignity and keep your private affairs private.

Powers of attorney: Individuals or entities you appoint to make financial or medical decisions for you are called agents or attorneys-in-fact. Appointed in a power of attorney document, these agents step in to protect your interests when needed, avoiding a court date and possible appointment of a government conservator. An agent steps into your shoes, having authority to perform nearly any task you’re able to perform for yourself, including managing a business, balancing your retirement portfolio, and filing taxes. Durable powers of attorney are commonly used documents that continue in validity after the incapacity of the maker of the document (i.e. “durable” against incapacity).

Trusts: Trusts are agreements that create an entity to hold some or all of your assets, often during and after your lifetime. Trusts are managed by trustees, who can be either individuals or corporate entities. Unlike wills, trusts do not go through probate. There are several types of trusts, and which kind is best suited to your family depends on your personal situation. By setting up and funding a revocable living trust, you can accomplish two important things. First, your assets will be distributed to your chosen beneficiaries and won’t go through probate upon your death. Second, you retain the ability to change or cancel the arrangement during your lifetime, enabling you to adjust your plan as your financial or family circumstances change.

Make sure your estate plan is air-tight

Deciding on appropriate powers of attorney and trusts are just two of the many steps you can take to keep your affairs free from court involvement. Give us a call today to learn more about what estate planning tools are right for you and about interference-proofing your estate plan.