By Craig Watson
A lot of people are interested in avoiding probate these days. Pete already had a Will but he read an article about how to avoid probate. He decided that’s what he wanted to do and that he didn’t need an attorney. He knew he didn’t have much time because he had terminal cancer. Pete wanted to leave his estate to his three daughters. He already had them listed as beneficiaries on his bank accounts. He owned his home and two rental houses. A friend told him he could deed each house to himself and one of his daughters so he would co-own each house with a different daughter. By continuing to co-own each house, Pete would be able to keep control of each property. He wanted each house to pass to one of his daughters upon his death so that a probate of his estate would be unnecessary.
So Pete headed to the county law library and told the librarian what he wanted to do. She explained that she wasn’t a lawyer and couldn’t give legal advice and then showed him a book where he could look up the deed forms. After studying the books and forms, he made some copies. He filled in the blanks and took the deeds to the county clerk’s office and recorded them. He felt pretty good about himself since he had saved whatever fees a lawyer would have charged to advise him and draft the deeds. His Will designated his oldest daughter as executrix so he called her and told her what he had done and that his estate would not have to be probated.
After his death, his daughters took the deeds to the county appraisal district and asked them to put each house into the designated daughter’s name. The appraisal district employee stated that Pete’s estate still owned half of each house and his Will would need to be probated. The daughters were confused so they made an appointment to see an elder law attorney about probating Pete’s estate. The attorney reviewed the deeds and realized that Pete had used the wrong deed to accomplish his goal. The attorney asked if Pete had any other assets or debts. The daughters explained that Pete had one credit card balance but that his bank accounts had already passed to them because of the beneficiary designation on each account. However, a hail storm had damaged the roofs on the houses and the insurance company had already sent them a check made out to Pete’s estate. The attorney explained that Pete’s estate normally could have qualified to be probated as a muniment of title, which is usually a cheaper, faster type of probate but because of the credit card debt and the insurance company checks payable to Pete’s estate, a full independent administration would be required. The attorney explained that if Pete had come to see him about the deeds, his fee for the consultation and drafting the deeds would have been less than a thousand dollars. Now, the cost of the legal fees, clerk filing fees, etc., for probate would be in excess of $2,000, in addition to the daughters’ valuable time spent to meet with the attorney, attend court hearings, and suffer the delays of probate. Pete’s daughters were disappointed.
This is a true story, although the names have been changed. Pete’s estate was worth over $1,000,000. He worked hard to accumulate his estate. The legal fees to properly accomplish his goal of avoiding probate would have cost less than 1/10 of 1% of the value of his estate. In this day and age of the internet, a fair number of people are trying to plan their estate without the services of an attorney who concentrates his practice in estate planning and probate. Certified Elder Law attorneys spend three extra years of their lives attending law school and annually pay for many hours of continuing legal education away from their offices in order to become experts at their craft. But the best training of all is simply practicing law every day and experiencing lots of different situations. Unfortunately for the families of the Petes of the world, a fair number of people are making expensive and time consuming errors while trying to do it themselves. The costs of fixing the problems caused by poor planning are always far more expensive than it would have cost to do it right the first time. Don’t make the same mistake Pete made.
Craig Watson’s law practice focuses on Estate Planning, Probate, Guardianship and Elder Law. Formerly a CPA, he has 25 years of experience. Call 903-813-8500 or go to Craigwatsonlaw.com.
