Death Probate is a legal proceeding to settle the estate of a person who has died. It includes appointing an executor/executrix, settling with creditors and dividing the assets among your beneficiaries. Living Probate is a term that was coined to describe a conservatorship or guardianship proceeding if a person has lost their mental capacity. Both Death Probate and Living Probates are time consuming, expensive and public in nature.
Normally, these procedures are optional. That may surprise you to read; yet, it’s true.
Death Probate is trigger when a person dies with real estate in their names or more than a certain amount of other assets in their name. That amount is different for each state. To avoid Death Probate without losing control of your assets you can create a Living Trust and “fund” it with your assets. A will does not avoid Death Probate. In fact, “probate” is Latin for “to prove the will.” It is a court proceeding for anyone with too many assets in their name when they die whether they have a will or not.
Living Probate is triggered if you lose your mind. It is estimated that you are six times more likely to lose your mind this year than you are to die. Living Probate is harder to avoid than a Death Probate. A Living Trust is the first step. When you transfer your assets to a Living Trust and appoint a person to control those assets in the event of a mental capacity you have removed the need for a court to appoint guardian over your assets. You must have a properly designed definition of incapacity in your Living Trust or the court will step in to determine capacity. When that happens, you become a ward of the state. However, more is necessary to avoid Living Probate.
A person that is incapacitated will need a person to take over taxes, government benefits and other assets that cannot be transferred to a Living Trust such as retirement plans. A properly drafted power of attorney can normally appoint a person you trust, such as your spouse or an adult child to take on these responsibilities. So that leaves us with health care choices.
If you are not able to communicate with the doctors a Living Probate will be initiated unless you have your state’s required health care proxy documents. If you move to a new state you should use update those documents to prevent a Living Probate from getting involved in any state conflicts of laws.[/vc_column][/vc_row]