Probates are not the end of the world, but there are several reasons why they are best avoided. Wills do not avoid a probate. Revocable Living Trusts, when properly funded, do avoid probate.
Forum for a Fight
Probates are a lawsuit. Experience shows that fights are more common in probate proceedings than trust administrations. There are a couple of reasons for this: (1) Many people feel they have to hire an attorney to represent them simply because they are involved in a legal proceeding; (2) A probate proceeding involves a series of hearings and many people feel like they need to “have their day in court” anytime they are involved in a legal proceeding or receive a notice of hearing.
Trust administrations of living trusts are private proceedings that do not require court filings and publications in the newspaper. They are not subject to public record requests. A probate, on the other hand, is a public proceeding. Documents in the probate proceeding can be obtained by the public from the court clerk and a Notice to Creditors is typically published in a newspaper.
Probates take time. Because of the notice provisions involved in a probate, a probate action takes four months, at the minimum, and typically much longer. The probate involves: filing a written petition with the court; publishing a Notice to Creditors; preparing a written Inventory and Appraisal of assets; paying debts, claims, and taxes; and a final distribution and closing of the estate.
Probates are significantly more expensive than trust administrations of revocable living trusts. Probates involve filing fees and publications fees which are not incurred in trust administrations. Additionally, probates typically involve payment of both personal representative’s fees and the personal representative’s attorney’s fees. Before July 1, 1995, New Mexico had a schedule that calculated personal representative’s fees and the attorney’s fees for the personal representative based on percentages of the assets. In 1995, the percentages were disallowed and now both attorneys and personal representatives can charge fees without limitation or restriction by the prior system of percentages.
Property in More Than One State
Probates have an added complication for people who own property in more than one state. Typically, a probate is required in each state where a person owns property. The principal probate action is called the domiciliary probate and the probates in states with limited assets are referred to as ancillary probates.