Is Probate Necessary?
As an estate planning attorney, many people ask me if probate is really necessary. The short answer is no, and I often advise my Cleveland, Ohio estate planning clients to avoid probate if at all possible. But what is probate? And, why should it be avoided? Here’s a quick synopsis to answer these questions.
What is Probate?
Probate is the legal process required to transfer certain assets at a person’s death. Probate becomes mandatory and necessary when a person dies owning assets in his or her name that do not pass to a survivor or beneficiary by operation of law or contract. An example of one of these ‘contracts’ might be a payable on death account (“POD”) or beneficiary designation. Through probate, claims, expenses and taxes are paid and property is distributed.
The assets subject to probate administration are referred to as “probate assets” while assets that pass outside probate to a survivor or beneficiary by operation of law or contract are called “non-probate assets.”
Probate is not the same as tax. Both Probate and non-probate assets may be subject to income and/or wealth transfer tax at a person’s death.
A will enables a person to choose how his or her probate assets are to be distributed following death. Without a will, the Ohio Statute on Descent and Distribution (Ohio Rev. Code § 2105.06) dictates how a decedent’s assets will be distributed.
Reasons to Avoid Probate
I often tell my Cleveland, Ohio clients to avoid probate for several reasons. First, probate is public. For a number of reasons, you may not want others to now the value of your assets being transferred to your decedents. The creation of a trust or other instrument is private and can avoid the public display of your assets. Second, the probate process is often time consuming. When dealing with the loss of a loved one, you don’t want to be caught up in court which is costly and often ends up prolonging the grieving process. Next, there may reason for wanting to control your assets through a trust; moreover, creating asset protection. Finally, there may also be certain tax advantages for avoiding probate by placing your assets in trust.
For most clients, I will often weight the pros and cons of creating a will versus a trust and explaining the benefits of avoiding probate. Often it comes down to the cost versus the value of avoiding probate. If you would like more information regarding probate, trusts, wills, or other estate planning tools, please contact my office at 216-276-4282. Baron Law LLC provides estate planning advice for the Cleveland, Ohio area. Call estate planning attorney Dan Baron today for a free consultation.