By Lane V. Erickson, Idaho Estate Planning Attorney
Many people I’ve talked to during my 20 years of working as an estate planning attorney seem to believe that going through probate is worse than dying. I can understand why many people would feel this way. Most people talk to family and friends and usually it’s only fun to talk about horror experiences rather than good experiences. As a result at your family party or when you’re talking with your friends over the phone or looking at Facebook stories generally all you hear about are the worst case scenarios when it comes to probate.
Nevertheless there may be some legitimate reasons to avoid probate. The biggest one that most people can think of is simply privacy. The second biggest reason is because of the expense associated with probate. Finally, some people want to avoid probate because they simply do not understand it and they believe that it’s worse than getting a root canal, being audited for taxes, and speaking in public, all rolled into one. If you are convinced that you want to avoid probate here are the three ways that you can do it:
- Die with Nothing (No Assets and No Debt)
So let’s keep this very simple. In Idaho a probate is required anytime you die when you have any ownership interest in any kind of real property regardless of whether it is a home, bare ground, a high-rise building, or any other type of real estate. Additionally a probate is required anytime you die when the value of your estate is worth $100,000 or more regardless of what the assets actually are. So the easiest way to avoid probate is simply to die at a time when you own nothing and when you owe nothing.
To be sure, this is a very tricky thing to do. In fact most people find it impossible to get the timing down exactly right. So the first option of dying with nothing, meaning no assets and no debt, is usually not really an option at all. Let’s move one.
- Die with Very Little
Option number two is a little more feasible. If you die at a time when the value of your estate is absolutely and undeniably below $100,000 and you have absolutely no (and I mean no) ownership interest in any type or kind of real estate, then you have what Idaho defines as a small estate. Because you’re estate is small the statutes in Idaho allow you to transfer property without having to go through probate. Keep in mind that your estate is still on the hook to pay any debts that you owe. As a result any individual who receives your assets without going through a probate because your estate is small will still be obligated to pay your debts.
All of this is possible through what we call a “small estate affidavit.” Idaho laws allow you to create an affidavit indicating that you are the heir of the individual who died and that their estate does not qualify for a probate. You can present this affidavit to any individual or institution that currently holds assets or money belonging to the individual who passed away. In this way you are able to administer and distribute the assets of the individual who died without having to go through probate.
While this is a good plan for truly small estates it doesn’t help most people because most people want to be rich Rich RICH! Even if they aren’t rich most people’s estates are not going to qualify for a small estate affidavit because there is usually a home involved. So while this may be an option for some people, it likely won’t be an option for most people.
- Make and Follow a Great Estate Plan
The third option that’s available for an individual who wants to avoid probate is to create a trust as part of their basic estate plan. After a trust is created the individual transfers ownership of all items that would normally require a probate into the trust, such as real estate and other valuable assets. By doing this the individual no longer retains any ownership interest in those items and as a result of this the individual may (keep in mind I said “may”) die with no assets or with very few assets, or at least not enough or the right kind of assets to require probate.
A trust is not subject to probate. A trust is simply governed by its own document which describes how property in the trust is to be held, handled, and ultimately distributed. This document also describes and identifies the individual who will be named as the trustee and who is then responsible to hold, handle and ultimately distribute trust property.
If you have questions about how I trust can assist you and your estate plan, we can help. We have over 70 years of experience and helping clients create customized estate plans, oftentimes which include a trust as well. We would be happy to help you as well.
ENLIST AN ESTATE PLANNING ATTORNEY TO HELP YOU
When it comes to estate planning or probate you should never try to do it alone. If you have questions for yourself or for your family and loved ones, we can help. Call us toll free at 877-232-6101 or 208-232-6101 for a free consultation with Lane Erickson and the Racine Olson team of Estate Planning attorneys in Idaho. You can also email Lane Erickson directly at email@example.com. We will answer your questions and will help you solve your Idaho Estate Planning problems.