‘Avoiding probate’ — apparently in the ’60s, it was one sexy topic

In the mid-1960s, a book called “How to Avoid Probate!” (exclamation and all) hit the national bestseller list, and it stayed there seemingly forever. At one point, it took over the No. 1 spot from another Sixties phenomenon, Masters and Johnson's “Human Sexual Response,” prompting author “Probate!” Norman Dacey to remark, “I don't claim, of course, that I made probate more interesting than sex – it was just that millions of American families had had painful contact with the probate system at one time or another.”

Probate is the system set up in each state to administer decedents’ estates; the court has jurisdiction to determine if a will is valid, decide on the validity of creditors’ claims and resolve disputes among heirs – seemingly not very sexy topics.

Nevertheless, Dacey became something of a celebrity, a kind of legal Don Quixote tilting at the windmills of the legal establishment. His book provided anecdotal evidence of abuses of the system in many jurisdictions, creating a picture of “clubhouse lawyers and judges” conniving to rob “widows and orphans” of their due.

In some instances, the picture was accurate. One effect of the attention Dacey brought to bear was a push for probate reform that continues until this day. Many states have simplified their statutes and gotten rid of outdated and unnecessary requirements.

Unfortunately, nearly five decades after “How to Avoid Probate!” first hit bookstores, many people still don't have a clear idea of what it is they're avoiding.

For instance, many mistakenly equate probate with the estate tax system and incorrectly assume if they “avoid probate,” their estates automatically pass free of estate taxes.

Many clients who come in to my office for estate planning tell me they think they need to set up a revocable living trust to avoid probate.

“Why is that?” I ask them.

They don’t really know – they just know probate is bad.

After we analyze their situation, we often arrive at the conclusion that a basic will and durable power of attorney will address their concerns just fine, thank you – even if it means their estate will go through probate.

There are – believe it or not – some advantages to probate.

The probate process was, after all, created to settle estates, to bring some legal closure, particularly with regard to creditors' claims. If a personal representative (or executor) publishes notice to creditors, any claims against the estate must be filed with the court within four months of the date of the first publication or they are forever barred by statute. (The same protection is available to a “notice agent,” such as a successor trustee, who publishes non-probate notice to creditors.)

The probate court also can be useful in settling disputes among heirs, providing a beleaguered personal representative with some authoritative backup in dealing with squabbling siblings or other beneficiaries.

Under Washington's relatively simple process, a personal representative settling an uncontested estate with nonintervention powers granted in a will (meaning he or she is not required to get court approval for most actions) can wrap things up in a few months, with most of the estate passing to the beneficiaries – the "widows and orphans" – and not to the "clubhouse lawyers and judges."

But if, after all this, you remain in the minority who are convinced probate ranks up there with boils, locusts and thunder and hailstones among the plagues visited upon mankind, let me suggest some strategies and a caution:

1) As I wrote about in a separate blog post, Washington now provides for “transfer on death” deeds that transfer real property automatically on death without the need for a probate.

2) Beneficiary designations on accounts can help your heirs avoid probate. Setting up accounts as joint tenancies with rights of survivorship or with “transfer on death” provisions will allow them to pass without probate.

The above mentioned probate-avoidance devices would probably help most people avoid visiting the iniquities of probate upon their heirs, yea even unto the third and fourth generations.

If you opt for a revocable living trust to avoid probate, make sure all assets subject to probate are transferred into the trust. This means deeding all your real estate to the trust, and titling financial accounts in the name of the trust, along with vehicles, boats – any substantial assets, especially those registered and titled with the state.

What happens if assets don’t get titled in the trust?

It could mean the plague of probate will be visited upon your heirs after all.

We’ll leave the boils, locusts, thunder and hailstones for another time.