Some may consider using various estate planning tools to save money by avoiding probate, but this mindset is often a misconception. Establishing trusts and other options can become more costly than probate expenses.
Still, saving money can be possible when avoiding probate but only in specific scenarios where factors and legal guidelines can impact the process’s costs. Skipping probate can result in savings based on the following conditions:
- The estate’s size and asset types – Probate can come with extensive costs if the estate is high in value and involves complex assets. The estate may also require appraisals and other procedures that can add to expenses. In this case, using estate planning tools to avoid probate could be the more cost-effective option.
- The estate includes real properties in different states – Going through probate involving properties in more than one state can bring ancillary proceedings involving those locations. These procedures can take a lot of time and work, potentially blowing up associated costs.
There is no such thing as one estate planning solution that can guarantee savings. Sometimes, going through probate can be cheaper than establishing trusts and other arrangements. Other times, it is more practical to create a diverse estate plan to avoid probate.
Considering the relevant laws, the benefits can depend on the estate plan’s features and other circumstances that may impact the outcome.
Incorporating goals in an estate plan
Before deciding to create an estate plan, it can be helpful to determine goals, such as generating savings in the long term or enforcing preferences involving inheritances. Receiving legal insight during this step can help identify what options can help accomplish those goals while addressing issues that might arise.
