You might have already gotten the pitch: Come for a free dinner and learn how to avoid probate. The sale is typically a living or revocable trust — transfer your assets now so when you die they will be distributed as you wish without having to pass through the probate court.
You might have even attended one of these dinners and gladly shared information on your assets with the trust salesperson.
So what is wrong with a free dinner and a revocable trust? A better question, according to trusts and estates attorney Charles Hampton, is, “What is so bad about probate?”
“Probate is misunderstood,” he says flatly. “if you have a properly drawn will which nominates an executor, you simply use the probate court to clear the way for that person to do the job. Most often, it’s very easy and inexpensive — and shouldn’t be a concern.
Then why is such a stigma attached to probate? And why do people offer free dinners and seminars to help you avoid it? In some states, probating a will can be a difficult and expensive process, but not in Georgia in most cases, Mr. Hampton points out.
“We have done a good job in Georgia legislating out most of the difficulty,” he says.
To save time and avoid confusion, Georgia has adopted standard forms for use throughout the state. Georgia law allows anyone who is an adult and competent to be named executor, so generally there is no problem getting the executor approved. Nor is the executor required to be bonded or provide accounting reports to the court in most cases. You can attach a self-proving affidavit to your will, signed by you and your witnesses, which eliminates the need for the executor to locate witnesses after your death.
Other accommodations have been made to keep costs to a minimum. There are generally no formal hearings in front of probate judges. And perhaps most important — and most misunderstood — the filing fee is reasonable and not a percentage of the estate.
“It has nothing to do with the volume of assets being distributed. It varies from county to county, but is generally between $100 and $200 –compared to between $1,000 and $3,000 to prepare and implement a revocable trust.”
More important to Georgia families than avoiding probate court is getting the right documents in place. In addition to a will, Mr. Hampton advises clients to complete:
- a financial power of attorney to allow an individual you designate to conduct your financial affairs should you become unable to do so yourself;
- an advance health directive which provides the individual the right to control all aspects of personal care and medical treatment, including the right to insist upon medical treatment, decline medical treatment, or direct that medical treatment be withdrawn.
So what makes revocable trusts so attractive? They can be helpful as a means to manage the affairs of a person who is or may become disabled. Moreover, they are useful in states where probate is not so easy or inexpensive.
“If you own real estate in Florida, for example, you might want to use a revocable trust to avoid the Florida probate court.|
But buyer beware. Because the trust is revocable — that is, you can get your assets back anytime you wish — there is generally no favorable tax treatment over a will. Some revocable trust salespeople fail to mention this important point. Nor does a revocable trust protect your assets from creditors.
Mr. Hampton recalls an encounter with a door-to-door meat salesman who had been working his neighborhood for a couple of years. “He disappeared for about a year. When he returned, he told me, ‘I was on the road selling revocable trusts.'”
Point well taken. Pay for dinner and pocket the savings!
By Charles J. Hampton, Esq.
Charles J. Hampton, PC