Georgia Estate Planning Blog

THE ALTERNATIVE TO PROBATE

Many people believe that if they have a valid Last Will and Testament (“Will”) when they pass away, their spouse, or their heirs, will be able to access their assets without the assistance of the Probate Court. In Georgia, and all other states, a Last Will and Testament is probated to remove the deceased persons name off his or her assets so they may be transferred to the rightful heirs.

In Georgia, if you die with less than $10,000 in a bank account, a family member, or legal heir, may obtain a simplified small estate affidavit from the Probate Court to gain access to this account. Beyond this small estate provision, most Wills will go through one type of formal probate process.

We often hear “My spouse died with a Will, he left me everything, and I never had to go through probate.” Many people may have an IRA, 401(k), life insurance policy, or annuity that allow them to designate a beneficiary. These accounts by law, avoid probate, as long as your beneficiary outlives the account holder. Unfortunately, no one explains to you that you must go through probate to remove your spouse’s name from many other assets. It is true that a person does not have to go through probate unless you need to sell an asset that is held in the name of the deceased person, or that is held as a joint asset without Joint Tenancy with Rights of Survivorship (JTWROS). We have clients appear years, even decades after their spouse dies, unable to sell their home, or assets like stocks and bonds, needing to probate to establish clear title to sell the asset.

FEES

Besides court fees, unless your Will specifically waives executor fees, a Georgia Executor is allowed the statutory rate of 2 ½% of all money brought into the estate, 2 ½% of all money distributed out of an estate (including real estate, stocks, and bonds, if sold by the Executor). Additionally, the executor may receive 10% of interest earned by the estate, and if real estate, stocks and bonds are not sold, the Executor may petition for an additional three (3) percent of the value of these assets distributed to the beneficiaries.

There are also attorney fees. A January 2017 article published by The American Academy of Estate Planning Attorneys referenced the 1994 American Association of Retired Persons (“AARP”) two-year study conducted by attorneys on probate titled “A Report on Probate: Consumer Perspectives and Concerns.”

The study revealed that in 1994, national probate costs were as much as $2 billion each year, with attorneys’ fees representing more than $1.5 billion of that amount, equating to as much as 20% of the value of small estates, and as much as 10% of even uncomplicated estates. This study claimed that the probate process inflicts undue strain, and emotional and financial duress on the unsuspecting public, who do not know they have alternatives to probate. AARP’s edict sums up the reason for lack of consumer knowledge: It’s a matter of money, and lots of it. The AARP study noted that attorneys often build lucrative practices focused solely on probate.

Alternatively, the “Living Trust” is a way to hold legal title to your assets without the need for probate. A surviving spouse retains full control of all assets funded into the Trust on the first spouse’s death, and then transfer to heirs is accomplished without probate. A Living Trust avoids unnecessary costs, frustrations, time delays, and family disputes that often accompany the probate process.

If you would like to discuss your alternatives to probate, we are here to help at (404) 260-1901.