For Your Own Good Understanding Michigan Estate Planning

Aug 23 2010Is Probate Really So Bad?

Probate has a terrible reputation.  The very word conjures up images of long delays, complexity, and huge legal fees.  Some people even think the State seizes your property or at least a portion of it after you die.  Actually, probate is intended to be a structured way of making certain that your assets pass to the right people according to your Will if you have one.  If you fail to leave a Will, then the State’s laws of intestate succession determine who receives your probate assets.  Intestate succession is simply the State’s best guess at who you would want to receive your property if you fail to make that decision yourself by having a Will.  Whether or not you have a Will does not really have a bearing on whether your assets pass through probate.  If you die with assets titled in your name alone and those assets do not pass by beneficiary designation, then those assets will have to pass through probate.  If you leave a Will, you decide who receives the property through the probate process.  If you do not have a Will, then State law determines who receives the estate.

Most probate estates proceed efficiently and without a huge cost.  I usually advise people to anticipate probate to run between $3,000 and $7,000.  The largest expense is the attorney’s fees going through the process.  Certainly, to the extent you can use Trusts and appropriate beneficiary designations to avoid this expense you should do so.  However, people often confuse regular probate proceedings with situations where beneficiaries are fighting or estates stay open for long periods of time because they are large and are waiting for the IRS to agree with an estate tax return before closing the estate.  Most probate estates do not run into those problems.  Even if you avoid traditional probate proceedings through a Trust, if beneficiaries of a Trust decide to argue, you can find yourself in Probate Court with large legal fees. 

So, the next time you hear someone talking about probate, simply realize that although it is a nice expense to avoid, it is not the horrible procedure that most people envision.