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A tale of two estates

judge signing on the papers


When we talk about “avoiding probate,” it can seem rather abstract to those people who have not experienced the probate court process. Instead of boring you with an overview of the probate court process, here is a tale of two families — one of whom had no estate plan. There are significant differences between avoiding probate and going through probate, in costs and time spent doing the administration.

The family of John Q. Public and Jane R. Public was fortunate: not only did Mr. and Mrs. Public pay off their home and have a comfortable retirement fund, they also established the John Q. and Jane R. Public 2010 Trust, a revocable living trust, to get their affairs in order. So, in 2021, after both Mr. and Mrs. Public passed away, their children were able to take care of the couple’s final expenses, pay off debts, sell the house, and make distributions, all in less than a year. Other than the broker commissions and closing costs incurred in the home sale, the family spent less than two percent of the trust estate on administrative expenses.

The surviving children of Lisa Doe were not so fortunate. Mrs. Doe, a widow, always planned to get her affairs in order, but after losing Mr. Doe, she never got around to it. When Mrs. Doe passed away in 2020, she owned a home, a retirement account, and assorted items of personal property. Since the value of the home exceeded the probate exclusion amount (which is only $166,250.00), one of her children had to open a probate case for the Doe estate. Sadly, that case is still winding its way through the probate court in 2022. By the time the probate closes, the estate will spend between four and eight percent of the estate value on statutory probate fees, court filing fees, and associated costs, plus the costs incurred in the home sale.

If both estates described above are worth $1 million, then the difference in administrative costs will be tens of thousands of dollars more for the Doe family in probate court, compared to doing all the same work outside of court like the Public family were able to do, thanks to the living trust.

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