Many times people will come into my office and tell me that they heard that they need to have a trust because they have to avoid probate.
Probate has gotten a bad reputation, but going through probate is not always a bad thing. A probate that occurs by default because of a lack of planning can be a bad experience, but the probate process can be a useful tool in a well thought out estate plan.
For example, when someone dies in Florida, creditors have up to two years to present claims regarding debts that they feel are owed to them by the decedent’s estate. This means that when the Trustee under the trust distributes assets to the beneficiaries, that distribution is made subject to a two year window of opportunity for creditors to present claims.
A small probate proceeding can reduce that two year window for creditors to present claims down to 90 days.
Another example is Florida homestead real estate. When someone dies and a family member in the appropriate category of family members inherits the homestead, the homestead protection against the claims of creditors remains with the house through the administration phase of settling the decedent’s affairs. This all happens by law however, when it comes time to sell the homestead, the beneficiaries most likely will find that the title insurance company wants to see that the court has confirmed that the house is homestead by issuing an order declaring the house to be homestead.
A small probate proceeding can help the beneficiaries obtain this order declaring the house to be homestead.
Finally, people hear that they need to avoid probate because probate is expensive and involves attorneys. However, what they don’t always realize is that not only is it more expensive to set up a trust, but it also costs money to administer the trust when someone dies because many of the same steps that occur in probate have to occur with the trust. The difference is that most of the steps with the trust occur outside of the court system. The difference is not that attorneys are involved in probate but are not involved in trust administration.
So the decision between choosing a will based estate plan or a trust based estate plan should not be made based upon the “need” to avoid probate, but based upon numerous other factors that help you and your attorney decide whether a will or a trust will work best for you.