What is Probate and Why Should You Avoid It?

Probate is the legal process for settling or managing your assets in court. There are two common types of probate proceedings:

• Living Probate (Guardianship). If you become incapacitated, by accident or illness, and cannot manage your assets yourself, someone else needs legal authority to manage your nest egg for you. You can appoint that person through a power of attorney. If you don’t have a power of attorney, however, the only way to confer legal authority on your behalf is through a lawsuit in probate court. In this lawsuit, a loved one or friend sues you, asking the probate judge to declare that you are legally incapacitated and appoint them as your legal guardian.
  
  Guardianship cases, like any other lawsuit, are expensive. But unlike most lawsuits (including the probate of a Will), a guardianship case will go on and on and on, as long as the incapacity continues. Your guardian will be back and forth to the courthouse, paying their attorney with your money, to ask the court’s permission to sell assets, pay a bill out of your savings, and to file annual accountings. Annual accountings balance your checkbook and update the court on the status of your nest egg for the preceding year. Why is all of the back and forth to and from the courthouse necessary? It’s because . . .
  
  The judge, not your guardian, is actually in charge of protecting your assets. Your guardian has very limited legal authority to act on your behalf, and he or she is under the direct supervision of the court at every step.
  
• Death Probate. This form of probate is the one you may be more familiar with. It can take a number of different forms, depending largely on whether or not you or your loved one left a valid Will.
  
  • If you leave a Will (the legal term is “testate”), the proceedings will all involve offering testimony designed to prove that your Will was executed properly, was never revoked, and to prove the circumstances surrounding your death. A Will can never be effective until the one who made it has passed away. And then only if it was executed properly, was not the product of someone exercising undue influence over you, and was never revoked by you.
    
    As with any lawsuit, a probate case is an invitation for disgruntled family members to argue about a host of issues, ranging from the validity of your will, to allegations of undue influence, or contests over who is the best person to be named by the court as executor. Any conflict in probate court will increase the cost of settling your estate assets exponentially. A relatively ordinary $5,000 process can quickly escalate to attorney’s fees and costs in the hundreds of thousands of dollars.
    
  • If you do not leave a Will, you are considered to be “intestate”, meaning without a Will. Without a Will, the probate process becomes significantly more cumbersome. It takes longer to complete and is more significantly more expensive than the process to probate a Will. The intestate settlement of an estate involves two separate components:
    
    • The request for appointment of an administrator to be in charge of settling your affairs, and, in the middle of this process
    • An application for a determination of the identities of your legal heirs. In this phase of the process, your loved ones will be required to pay, out of your assets, for a second attorney. This attorney is appointed to represent your “unknown heirs”.
    • Once the heirs have been legally declared by court order, the request for appointment of an administrator can be resumed and completed. As with guardianship, unless all of your heirs agree in written submissions to the court, the administration of your estate will be dependent on the judge’s direct supervision and permission, just as the guardian is dependent on the court.

Some of the problems with probate may already be apparent to you. But in the interest of being as clear as we can, here are the biggest problems we find in the probate system of the 2020’s:

1. Probate Surrenders Your Discretion to Strangers. The first problem we find with probate is perhaps the least-discussed. Our founder believes that this is the most significant, because he is convinced that you – alone or in concert with your spouse – are the best person to decide who should be in charge of your assets when you can’t, who should benefit from your life’s work and values, and how and when that should happen. The reality is, the state has laws in place to exercise any discretion, any choice, that you fail to make. The state also stands ready to make decisions involving disputes over your plan.
   
   There is a progression in the amount of authority you surrender to state law.
   
   1. If you fail to leave even simple instructions in the form of a will, the state will make every decision for you and your loved ones:
      
      a. Who will be in charge of settling your estate affairs,
      b. Who will benefit from your life savings and in what percentages, and
      c. How and when they will receive their inheritance from you
      
      There are countless ways in which the one-size-fits-all state laws can conflict with what you know is best for your family. For example, if yours is a second marriage, your current spouse will inherit far less (or far more) from the property you brought into the marriage than you might want. The same is true of the property you have accumulated together, during your marriage. The division of property between your surviving spouse and your children may not reflect your actual wishes at all. Regardless, you should never assume that your spouse will inherit everything from you, if you don’t leave at least a valid will.
      
      The time and the way children or grandchildren who inherit from you will inherit their shares of your estate may be the worst possible outcome, unless you leave a plan. They will all inherit your property outright, with no restrictions on the use of the property and no protection from any circumstances like a troubled marriage, financial problems, addictive behaviors, or other risks of life. Minors will inherit at age 18, also outright, with no one to protect them from wasting it all.
      
   2. Leaving a valid Will substitutes your wishes for that of the state concerning who will inherit and who you want to be in charge. If it contains proper instructions in it, a will can also insert protections for your spouse, children, or grandchildren so that their inheritance can be protected from life risks. However, a Will still leaves the probate court with considerable discretion.
      
      a. There may or may not be sufficient proof of the validity of your Will
      b. The court still has the discretion to appoint someone other than the person you designated as your executor.
      If, for example, another family member contests your choice of executor, the court may not appoint either family member.
      The judge may appoint an independent party – usually an attorney – to be executor, and your property will pay for it.
      
   3. If, however, you leave your property in the form of a Trust – not a Will – your wishes will be substituted for the state’s plan and the settlement of your estate will take place privately, by the persons you trust, for the persons you love. No probate proceeding will even be necessary, much less required. Your plan would play out on your terms, no one else’s.
      
      Don’t surrender your discretion to state officials lightly. The freedom to do with your life savings what you will is not something you should give away, ever. We can make it easy to assume the total control you deserve.
      
2. Probate is Expensive. Every probate case is a lawsuit. It involves filing fees and other costs charged by the court, and it involves hiring an attorney to represent your executor or administrator in court. In 2015, the most recent year for which we have data, the average cost of a probate proceeding in Texas was $10,000 to $15,000. Allowing for the reality that those figures include the longest and most heated contests, as well as the simple cases we all hope ours will be, it is still true that even an uncontested probate of a Will can cost your family $5,000 or more. The average uncontested guardianship case will cost $20,000 or more – depending upon how long your incapacity lasts. If any part of the lawsuit is contested, those costs will escalate out of control very quickly. I have seen multiple probate and guardianship files that involved attorney’s fees alone in excess of $100,000.
   
3. Probate is Time Consuming. The fact is, no Will is effective as of the moment of your death. It isn’t effective until the proper proof has been provided to a probate judge and the judge has ruled it is valid. Only then will an executor be appointed to take charge of settling your affairs.
   
   The average probate proceeding takes eighteen (18) months from the date of the decedent’s death. Part of the reason for that delay is occasioned by your family members. Part of it is due to the normal workings of a lawsuit, the court schedule, and the normal delays involved in litigation.
   
   Consider your family as an example. After you are no longer with them, there is going to be a natural and normal amount of grief to process. That takes time. As attorneys who probate wills, we receive our first contact from a family member, on average, between six and eighteen months after the date of death. The court process that comes after presents its own timeline, but even an uncontested court case typically takes three to six months to complete.
   
4. Probate is Public. Every lawsuit is a matter of public record. In larger counties, court records are even accessible online. Every probate case makes public your financial affairs. It is available to anyone who cares to look. And there are companies with vested interests in looking. That is why we get reports all the time that, following the death of a loved one, phone calls and mail change dramatically. For example, family members often get incessant calls from companies that want to buy your house.