Estate Planning Basics (First Installment); I Want To Avoid Probate!

Why Am I Being Left Out In The Cold?

The title of this post is the lament of many clients who have passed through my door. Why do people feel this way? What is there about probate that stirs negative emotions of so many people?

When asked, “What is there about probate that you wish to avoid?”, the responses are predictible.  “It costs too much.” or “It takes too long.” or ” I don’t want the state to get my property.”

Further investigation usually bears out the fact that those responses are based upon experiences where it turned out to be costly, lengthy, or very little was left to divide among the recipients after all was said and done. But why?

The truth is that it isn’t the process that is the problem, it is the people or an asset that is troubled which cause the delays, expense or drain the estate of all its assets before the heirs or devisees get their share. Too often, the family disputes create many of the impediments to efficient processing of the decedent’s property.

Once again, “It isn’t the process, it is the people.” When choosing a process, a trust, a Will, or intestate distribution all have the same people and assets. Understanding the underpinnings of the delays or expense and counseling the client to avoid those pitfalls is critical to avoiding them to maintain harmony in the family so that family members are not pitted, one against the other in the process.

For clients who insist that they want a trust to avoid the problems associated with probate, they need to understand that frequently the trustee is not required to disclose the entire contents of the trust to the beneficiaries. As I have heard said many times, “Sunshine is the best disinfectant!” Tell someone that they will be taking under a trust and they are not entitled to see all of it only sets the stage for paranoia to set in and a request to see it all. Tell a spendthrift that they will get distributions only after they have reached a certain age only sets the stage for them to petition the court for earlier distributions due to an “emergency” giving the trustee the authority to make distributions earlier than envisioned.

Many battles in probate originate with the testator’s desire to treat children with disproportionate shares. It is often viewed by the parent as necessary because one of the children failed to experience the  financial success of other siblings. And, of course they have the right to give less to the more successful siblings. Unfortunately, many of the more successful children will view this with disdain and it may put into motion challenges to the testator’s plan of distribution. Often battles are waged over some of the seemingly smaller items in the estate. A child doesn’t want to appear to be greedy, yet he or she feels the need to make a point. . . .

“Blood &Money” by P. Mark Accettura is full of passages that I frequently quote and explore with my students as it is full of sage advice in my opinion.

Treat all of your children equally.

An unequal allocation is a blatant and unforgivable showing of favoritism that will re-activate old sibling rivalries and hurt feelings . . . [e]xceptions to this rule are the truly handicapped and those who would use their inheritance to further an unhealthy lifestyle of addition or sloth.

More successful children will not understand disproportionate shares. Just because they demonstrated discipline and hard work to get where they are doesn’t mean that they should share in any less as it will be viewed as a measure of the parent’s love and affection for that child.

Particularly troublesome are those individuals who are excluded completely. As Mr. Accettura explains;

Several studies . . .have shown that people will regulate their behavior only if they believe that there is a realistic chance that they can regain acceptance [share in the decedent’s estate]. If they believe that their efforts will be futile, they become aggressive, self-defeating, and self destructive.

We see this being played out all the time as individuals will say that “the State will get everything” if it goes through probate. The mistake is that clients believe probate is the problem when, in fact, if the testator left equal shares to each of the children, none of the acrimony would ever arise. An all too common occurrence of siblings who never speak to one another again as a result of a Will contest could have been avoided by treating everyone equally. If you don’t believe me, tell that child who was omitted or treated deferentially that they will be given equal shares and you will see an immediate change in demeanor and the threat of litigation will dissipate.

In future installments I will further examine some of the reasons probate proves to be problematic and in most cases it can be easily avoided with proper counsel.