Probate Part II – When Probate Is Preferred

In part two of Smith Jadin Johnson’s series on probate, this post discusses the scenarios when drafting a will as a client’s main estate planning device, and subsequently probating the will, makes the most sense.

The chief advantage of a will over the use of a revocable trust as one’s main estate planning device is the device’s comprehensiveness, simplicity, and longevity. In addition, wills are usually less expensive to draft than revocable trusts. The chief disadvantage, of course, is a will needs to be probated, which has a cost, both in court fees and legal fees.  However, for the clients described below, the simplicity of the will, along with the lower legal fees at the outset, often outweigh the increased costs for probate.

Comprehensiveness, Simplicity, and Longevity

While a revocable trust only covers assets that actually are transferred to a trust, a will, by contrast, covers every asset you own both now and into the future that is not a “non-probate” asset (see the previous post on probate for discussion on non-probate assets). In short, a will covers everything you own now – and everything you ever will own.  There is no need to update the document as you acquire property, be it cars, jewelry, or real estate (unless you want to change who gets these assets). Whatever you own upon death is covered by your will.

Because a will covers all the assets you own or ever will own, they are far simpler in terms of drafting and updating.  There is no need to update any real estate deeds, or otherwise transfer assets, both of which are required for a revocable trust. Updating a will really only occurs because a client desires to make changes to the persons whom will receive assets. For most clients, they draft the will once. Borrowing a marketing slogan from an infomercial from years past, with a will you “set it and forget it.”

Clients for Whom a Will Is Appropriate
Wills, and the subsequent probate process, are ideal for clients who (1) do not own multiple parcels of real estate; (2) do not own businesses; and/or (3) do not have large estates.

If a client owns multiple parcels of real estate (say a home, a lake home, and perhaps a winter getaway condo), each of those parcels will likely need to be probated, and often times probated in different states (think home in MN, cabin in WI, and condo in FL).  Accordingly, probate fees will likely outweigh the increased cost of putting those parcels in trust.  By contrast, if all one owns is a home, then the probate fees likely do not outweigh the increased cost of a trust.

For clients who own businesses, a trust can be a useful tool for succession planning (keeping the family business running) and keeping ownership of the business a private affair (wills, by contrast, are public documents once probated). In addition, larger, more complex estates may find the use of holding assets in trust beneficial, not only for tax purposes, but for privacy purposes as well.

So, who should get a will?  Well, clients who do not fall into the categories above – which is really most people.  Unless you find yourself in one of the unique situations above, you are likely better off going with the less expensive and less complicated standard will and paying the probate fees.

Of course each client’s situation is different and there is no “one size fits all” estate plan, but here at Smith Jadin Johnson we can steer you in the right direction and get the appropriate plan for you put in place. Please give us a call to discuss how we can help.

Stay tuned for the next post in this series in which Smith Jadin Johnson expands on when it is appropriate to execute a revocable trust and avoid the probate process.

-Charles Austinson – Attorney @ Smith Jadin Johnson, PLLC