Senior Voice -

By Kenneth Kirk
For Senior Voice 

Exploding the biggest myth about wills

 

April 1, 2022 | View PDF



People believe a lot of things that aren’t actually true. Butter doesn’t help a burn. Your hair and fingernails don’t continue to grow after you die. Sarah Palin didn’t say she could see Russia from her house.

In estate planning, the biggest myth is that having a will avoids probate.

I don’t know how many times I have looked at the astonished face of someone in my office when I tell them there would have to be a probate case, even though they have a perfectly good will. Many people, having been told they need to have their last will and testament in place, make the mistaken leap to the conclusion that their heirs won’t have to go through probate if they have a will.

But it ain’t so.

Let’s take a step back. What is probate? It is a court case, held after a person dies, to oversee distribution of their assets. It is not, by any stretch of the imagination, an ideal process. Probates cost money; it is theoretically possible to do one without a lawyer, but very difficult. It can run many thousands, or even tens of thousands, of dollars to get through the whole thing. It takes time; there are built-in delays in the process, so even in a simple uncontested probate you are typically looking at a year or more to get done. It is also easy for a disgruntled creditor or heir to hold things up. And it’s all done in the public record for anyone to see.

Why would you need a probate? If you do, it’s because you have assets that require a judge’s order to collect and distribute. For instance, if you own your home and don’t have a surviving spouse or record a transfer-on-death deed, no title company is going to let your heirs sell the property unless a judge signs an order officially appointing somebody as the executor. Or it may be an account that doesn’t have a designated beneficiary, or a life insurance payout if the person you listed to get the money dies before you.

One of the phone calls I hate to get is from someone saying “the bank is telling me I need something called letters testamentary. Is that something you can get for me? I need it this week if possible.” No, sorry. Letters testamentary means a full-scale probate case has to commence. I hate to be the bearer of bad news.

So what good is a will? It doesn’t avoid the probate, granted, but it guides the probate. When someone files an application for probate, the judge looks at whether that is the person nominated to be executor in the will. If it is, no problem, the judge signs the order. If not, or if there is no will, either all the potential heirs have to agree to that person serving as executor, or the judge has to set a hearing to decide who should be the executor.

Incidentally, one of the most important parts of the will is the statement that the executor can serve without posting a surety bond. Having to post a bond is expensive and can further delay the process. But if you don’t have a will, all the heirs have to agree to waive that requirement. Either that, or you have to pay a pretty penny to a bonding company.

The final distribution is also important. If the will says who gets the assets, that simplifies things tremendously. If there is no will, well… there is a statute which says who gets what (it’s called the intestacy law) but it isn’t always commonsensical. For instance, if your husband or wife dies and you don’t have children, part of the estate will be shared with his or her parents. Yeah, the parents of the deceased sometimes get a share, even when there is a surviving spouse. And if you die with a surviving spouse and also have kids, whether it all goes to the spouse depends on whether either of you had children from prior relationships.

Oh, and that kid who is estranged from the family? The one with the drug problem who you haven’t seen in 20 years? He’s entitled to a full share of the estate. But only if you don’t have a will.

So a will doesn’t avoid probate. A living trust can do that, although in many cases just having beneficiaries designated on assets can be sufficient. But a will doesn’t avoid probate. A will guides the probate, so it can go more smoothly, and can go in the direction you want.

It’s usually a good idea to avoid probate, but if you don’t do that, at least have a will – properly drafted and executed – in place. As bad as probate is, probate without a will is worse.

And for those of you still thinking about the first paragraph, it was Tina Fey who said that, on Saturday Night Live.

Kenneth Kirk is an Anchorage estate planning lawyer. Nothing in this article should be taken as legal advice for a specific situation; for specific advice you should consult a professional who can take all the facts into account. Really, would I lie to you?

 
 

Powered by ROAR Online Publication Software from Lions Light Corporation
© Copyright 2021