“Probate” has become a word mixed with mystery and distrust. As a consequence, one of the statements I hear most often from my clients is, “I/we want to avoid probate”. The fear of this word has led many people to invest in expensive, overly complicated trusts, change their account ownership, transfer title to their homes while they still live there, and take many other unwise and often irreversible steps. Yet when I ask my client “why” it is so important to avoid probate, they usually say something like “it’s so expensive, and I want to save taxes.”
It’s not my objective to convince you that probate is a good thing. However, I want to briefly explain what it is and is not and to dispel the myths and mystery a bit. When someone dies, they usually own things – in particular, land and items such as automobiles and bank accounts that have title or are in the sole name of the deceased. This applies to nearly everyone who owns something and is mortal (that would be you). To get those assets out of the deceased’s name and into their heirs’ names is a task that requires court supervision. The point is, society wants an orderly process to close out someone’s affairs and to distribute their assets to the persons they intend. That legal process is called “probate”. The term simply means “proof” and what it means in most cases is proving to a judge that the deceased has actually died, that the document that purports to be their will is actually their will, and that the person asking to be the executor has a right to do so. The point is to make sure that the deceased’s obligations and intentions are fulfilled. That’s a good thing.
Normally, a Will nominates an Executor (known as a “Personal Representative” or “PR” in this state). That nominee is formally appointed and anointed with the legal authority they need to manage the estate by commencing probate. In most instances, once started, the only other role for a judge is to stand by in the event of a dispute. The PR normally files a closing report when the estate is ready to distribute. Until then, the PR can sell what needs to be sold, file tax returns, close bank accounts, pay bills, notify creditors and do the other work the deceased could have done if they were still alive. The PR is accountable to the heirs, as they should be, to make sure the estate is properly handled and when it’s time to close, that the heirs receive their fair share.
Because of Washington’s streamlined probate system, the expense is moderate and is generally payable from the assets of the deceased. Once it is complete, the PR and heirs can be confident all the legal steps needed to be taken to close out the financial affairs of the deceased have been accomplished. Thereafter, the estate is distributed and closed. Oh, and about taxes – as the old saying goes – two certainties in life: death and taxes. Probate does not give rise to taxes. A properly planned estate will avoid what can be avoided and reduce what can be reduced. Probate has no negative effect. Current tax rules actually favor passing property through an estate. So, before you turn your affairs upside down in an effort to avoid probate, or enter into some costly “estate plan” that involves complex trusts or lifetime transfers, talk to an estate planning lawyer. Determine whether probate is a serious roadblock that should be avoided. The fact is, when someone dies, there’s a fair amount of work to do, whether or not a probate is involved, so in most instances, those trusts and other techniques save little, and often complicate things far more. Be careful out there. As I often say to my clients, it isn’t rocket science, but it is law. Take your legal advice from the one person trained, licensed and insured to give you that advice: your lawyer.