Patty Loris, CPF outline on "how to avoid probate".

1. Dorion-Gray Coffee Talk
Plan Ahead, Avoid Probate
January 22, 2015 and February 11, 2015
I. What is probate?
a. Overview of the process.
i. Who are the players:
1. Decedent= deceased individual.
2. Executor= named individual or corporation responsible for handling the
process.
3. Beneficiaries= individuals or institutions who will receive something
from the decedent’s estate.
b. Steps in opening probate.
i. Preliminary:
1. Gather inventory of assets,locate heirs and beneficiaries.
2. File will with county clerk. File appropriate documents and pleadings
with clerk.
3. Set for hearing. Wait statutory period of time after giving notice to heirs
and beneficiaries or obtain waivers from everyone.
4. Go to hearing, where required, and request judge to issue letters of office
to executor.
ii. Role of executor.
1. Executor now has power to gather assets,possibly make distributions.
2. Publish notice. Wait full 6 months for claims.
3. Once claims are settled, or where no claims are made,executor can wind
up estate and make distributions.
c. When is probate necessary? When can it be avoided?
i. Estates over $100,000.00 or where realestate is involved.
ii. Ancillary probate: when real estate is held in another state (individually titled).
iii. Creditor issues or potential litigation.
II. Reasons for avoiding probate.
a. Cost
i. Filing fees
ii. Attorney fees
1. Do you need an attorney? Pros and cons.
iii. Publication fees
iv. Unexpected costs
1. Locating missing heirs, appraisals; bond; contesting claims.
2. Ex: where a sibling can’t be found, must follow expensive steps to make
sure notified.
b. Timing issues/delayed distributions

2. i. Minimum time is 6 months for publication, by law.
1. More realistic to expect at least one year.
ii. Lag time between death and opening of probate.
1. Consequences: banks/financial institutions need letters of office for
executor to act.
iii. Ex: Waivers can make streamline the process; however, very few estate actually
utilize waivers, i.e. where beneficiary is non-individual or where beneficiaries
can’t be located/won’t sign waivers, must wait full time period.
c. Court oversight
i. Limited flexibility and discretion by executor.
ii. Judge must approve certain steps in the process.
iii. Ex: where bond isn’t waived, can be at court’s mercy to make distributions.
Incur additional costs to get court approval.
d. Privacy
i. Everything filed- including inventory- is public record.
ii. Ex: IRA of $2.5 million with no beneficiary. Children did not want other family
members and others in community to know of that asset,but had to disclose it.
III. Tools to Avoid Probate
a. Living Trust
a. Characteristics of living trusts.
i. Role of the individual establishing the trust.
b. Establishing a trust.
i. Formal requirements.
c. Importance of funding the trust.
i. Trust only controls assets in it.
ii. Re-titling of assets
d. Cost comparison
i. Cost of setting up a trust vs. probate process.
e. Administration of a trust
i. No lag time waiting on court.
ii. Trustee role vs. executor.
iii. Probate issues mentioned earlier can be avoided.
b. Jointly-held assets
a. Most over-used method.
b. When it is appropriate, when it’s not.
c. Why it’s better to use a trust.
d. Potential problems:
i. Gift tax implications.
ii. Subject asset to creditor issues.
iii. Simultaneous death issue.
iv. Potential for abuse by joint owner.
c. Beneficiary designations.
a. Ex: Retirement accounts, life insurance policies.
b. Beneficiaries trump any other document.
c. Pros and cons.