Avoiding bushwhacks includes avoiding probate court. I know I am repeating myself here, but this is a common area of misconception. The downsides of probate court are numerous. The attorney fees, which they often refer to as ‘administrative expenses’, can be 5-7% of the value of your probate estate. For example, if you have One Million Dollars of assets moving through the Probate Court, the attorney could get a $70,000 attorney fee. There are also court costs in North Carolina. Court costs are a version of a tax on the assets that are moving through your probate estate. They can be a cost of up to $6,000 per person or $12,000 for a couple. There has been talk of moving that number up to $9,000 per person.
Time delays – we have been told by the Administrative Office of the Courts that the time delays on the average probates are somewhere between 18 months and possibly 24 months. This means that from the time you put the Will into the courthouse until the time the courthouse says, “You can now pay out the money,” can be a year and a half to two years.
Here in Asheville, North Carolina, there is one disputed probate that has been in litigation for 16 years and it is not over yet. Everything is public record when you are in probate court. Who gets the money? How do they get the money? How much? They are all public record. There is a huge loss of control when you are in the court system because the court is in control, not you, not your family. Ever since I have been a lawyer, I have always felt that there were , what I would call, ‘scavengers’ in the courthouse hanging around the court system, and they a re looking to pick up assets cheap or at a reduced cost out of a probate court or out of a divorce.
Creditors and predators – some of them are the vultures of the courthouse or they are doing it electronically now because it may be public record. There could be other ones too. My mom used to talk about when there was a widower at church and the widows would start bringing pies and cakes to the widower, but yet, they didn’t bring pies and cakes to the widows. My mom did not like that. Again if there is a late remarriage or blended family, we have to balance the estate plan. We want to pay attention to that balancing act when you do the blended family estate plan.
You should have remarriage protection in your estate plan if one of you passes on and the surviving spouse remarries. You will want to have some protection built in the plan that says ‘The new person has to sign a prenuptial agreement’. Something along those lines with the theory being, ‘Let’s keep the money in our family as opposed to going to somebody else’s family members.’ We can design that in a well-designed estate plan.
You can build in lawsuit protections from a car accident lawsuit. Inherited IRAs may or may not be creditor protected. In some states, they are, but in other states, they are not protected from a creditor in a lawsuit. People move from one state to the other and the laws change.
Another thing I have learned as a lawyer is that just because something is a law right now doesn’t mean it will be the law in five or 10 years. You will have a different legislature and, a different political party may be in control with a different agenda.
Also, some adult children are their own worst enemy. They may squander the money, squander any inheritance and blow it all in a year or two years. You can set it up so that the money comes out over time in slow monthly payments so that they have access to the money but they can’t blow it all up at one time.
Is there a hidden trustee in the Trust or person who runs the Will? Can you trust your Trust? One of the things that has been unusual that I have seen recently is lawyers that will place themselves inside your estate plan as the successor trustee after you are gone. You don’t realize that it happened. They don’t tell you. You believe the one you chose is going to be your successor trustee. Yet the law firm or lawyer has put themselves in the fine print, name themselves as a ‘Trust Adviser’ and then later refer to the trust adviser as the successor trustee so you don’t see their name listed in the trustee section. If you don’t know what is happening, after you are deceased, it is too late to fix it and too late to modify it.
You don’t want to pay unnecessary estate taxes, capital gains taxes or income taxes. Those are pieces you want to watch out for when you are designing the e state plan.
NOTE: This is an excerpt from the book, The Legacy You Leave, by Steven Andrew Jackson, Esq. You can buy the book on Amazon or Kindle. Click here for details.
At the Law Firm of Steven Andrew Jackson, Attorney and Counsellor at Law, we have helped hundreds of families protect themselves and their loved ones, avoid Estate Taxes and Probate Costs, and keep their Estate Plans current with the law through The Customized Protective Estate Planning Solution™.