ESTATE PLANNING; ADVENTURES IN PROBATE:
COULD THIS HAPPEN TO YOU?

     Estate planning is an important part of our overall life plan for financial stability and security. Many of us, however, either postpone this process or ignore it altogether. If you fail to do any estate planning, or do only the minimum of executing a Last Will and Testament, your estate will be subject to a probate court proceeding to monitor the payment or your debts and the distribution of your assets. This will be costly in time, money and frustration, and, if you have no Will, you lose control over who will be appointed to handle the estate administration and how your assets will be distributed upon your death. Consider the following example.

     Alex and Sara are in their late 40's. They have 3 children: Sam, who is 18, Joy, age 12, and Josh, age 10. They own a home, 2 cars and have checking and savings accounts and 2 small life insurance policies. Sam is planning on attending college in the fall for which his parents have agreed to pay out of their savings. They have done no estate planning, not even a Will. Alex and Sara are both killed in an automobile accident. What happens now?

     First of all, Sam, Joy and Josh are not only facing the grief of having lost their beloved parents, they are left with no means of support. Alex and Sara’s assets will need to be probated in order for their children to obtain title to them. However, Joy and Josh are still minors. This means that someone will need to be appointed to take care of them and to manage any assets they are entitled to receive from their parents until they reach age 18. Sam, who was depending upon his parents to pay for his college education, will have to postpone his studies until the court appoints someone to handle the administration of Alex and Sara’s estate and to authorize the distribution of his share.

     This, of course, will take some time. At a minimum, the probate process will take 6 months and require hiring a lawyer and paying court filing fees and publication costs. In the meantime, the assets are tied up and cannot be used to support the children. How will they live? Since Joy and Josh are still minors, either Sam, or some other adult, will need to be appointed to act as the legal guardian of Joy and Josh until they reach age 18, not only for the purposes of handling their property, but also to take care of their physical needs. The state social services could show up at their doorstep and take Joy and Josh into custody, at least until someone is appointed by the court to take care of them.

     Sam, having already reached age 18, is old enough to act as their guardian, and as his parents’ personal representative. Neither job is an easy one, least of all for a teenager. He will have to work with the lawyer to open the probate proceeding to get permission to transfer his parents’ belongings to himself, Joy and Josh. He will also need to file a guardianship proceeding to be appointed their legal guardian and thereafter to care for his brother and sister. This would be quite a burden on an 18 year old boy. There is also the possibility that the assets left by Alex and Sara, if not properly managed, will not be sufficient to provide for their children’s needs for very long. Of course this could mean Sam will have to get a job and further postpone attending college.

     Had Alex and Sara done some estate planning to provide for their assets to be put into a Trust for the benefit of children, including their support, health and education, there would be no need for a probate proceeding. They could also name a guardian to take custody of Joy and Josh until they reach age 18. Sam could immediately attend college and there would be someone to manage and invest the assets and to take care of Joy and Josh until they reach an adult age specified in their estate plan.

     Probate is virtually inevitable if you do no estate planning prior to your death. Even a Will normally requires a probate proceeding, after all the word “probate” means “to prove the Will.” By creating an effective estate plan including a Living Trust, probate can be avoided and your assets will be passed on to your heirs as you intended without the involvement of courts, lawyers, high fees and delays.

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