Estate planning can involve the implementation of some rather sophisticated strategies intended to prevent your assets from eroding as they change hands after you pass away. But what are these sources of erosion? Are money, property, and securities subject to some natural force that inevitably whittles them down in the same manner that a river can turn a rock into a canyon?
The fact is that a lot of people would probably say that there should be no cost involved in handing over their assets to their loved ones upon their death. But those erosive forces are out there, and the job of the estate planning lawyer is to guide you around them and keep your assets intact as you pass on your legacy.
One of the legal impediments to smooth asset transferal is the process of probate. When you pass away your will must be “probated,” and this is when the probate or surrogate court supervises the administration of your estate. Depending on the details of your case this is not always a completely bad thing because the venue ensures a degree of transparency, but probate is time consuming, and it can be very costly.
The probate process can take anywhere from several months to several years to run its course, and this time lag can be tough on your heirs. The costs associated with probate potentially include a fee paid to the probate court itself, legal fees, accountant fees, executor fees, and appraisal fees. When you add this up, probate costs can consume as much as 7% of the total value of the estate.
There are a number of estate planning tools that can enable probate avoidance, like living trusts, POD accounts, life insurance, and gift giving. The best combination for you will depend on the details of your estate and the specific manner in which you envision your legacy.