Frustration, disbelief, and anger are the typical emotional expressions when family members realize what a probate procedure entails.
The issues in the procedure with which they will have to deal before they can gain access to the funds in a bank account abroad (e.g. Switzerland or the USA); include a long timeline (an average of two years) and the high costs. We must also keep in mind that this procedure begins when the family members are emotionally weakened by the loss of a loved one.
The term probate covers all procedures related to the administration of a deceased person’s estate. More specifically, probate is the legal and fiscal process that must be conducted before the assets of a deceased person can be distributed to the heirs or other beneficiaries.
Throughout this process, the personal representative, also referred to as the executer, should arrange for an inventory of all the assets left behind, the payment of all creditors, and finally the proper distribution of what is left in the estate for the heirs and other beneficiaries.
Typically, if the deceased person had a will, the executor or estate administrator is named in the will.
If there is no will, then the court appoints the executor, usually the spouse or an adult offspring.
A will, also referred to as a testament, could be described as a document by which a person describes his or her wishes with regard to the administration and distribution of his or her estate after death.
The executor or administrator is the person who should conduct the probate procedure under the guidance of legal and financial counselors. Two of the necessary actions that the executor should undertake are :
1. To notify all the heirs, creditors, and other interested parties of the passing of the deceased. In some countries it is mandatory to publish a notice of demise. This notice is to serve as a public notice to enable those with an interest in the estate, such as creditors and other potential beneficiaries, to file a claim (within a specific time frame) against the estate.
2. To make an inventory and collect all the assets of the estate, depending on the circumstances. If necessary, the executor arranges the sale of real-estate and other assets and makes the payments to any creditors. This is to ensure a complete and accurate reckoning of the assets available for distribution to the heirs and other beneficiaries at the end of the probate process.
Problems with probate are that it can cause a loss of privacy due to necessary publications and can cause disputes over the deceased’s assets among siblings and other family members.
Public information about a future distribution of wealth, if seen by the wrong people, could lead to adverse consequences—it may be seen by unscrupulous individuals who look for opportunities to defraud families of their inherited assets. In addition, the time which it takes before the completion of the probate procedure could lead to a shortage of funds needed to cover the living expenses of some of those left behind. As mentioned above, it is not uncommon to see probate timelines of two years or more, especially when the estate contains assets located in foreign countries.
However, there is good news. There is a simple way in which the difficult, drawn-out probate procedure can be avoided. By placing one’s assets in a trust or private foundation, one can avoid probate entirely and arrange a timely and smooth transition of the distribution of one’s assets to those left behind. The use of a trust or private foundation brings with it the following advantages:
1. Lowers the expenses (a private foundation cost less than US$ 5,000), allowing more assets to be left for distribution to the heirs.
2. A shorter timeline (no waiting period) within which the assets will become available to the heirs and beneficiaries sooner.
3. Precludes family disputes and aggressive incursions by outside parties because in the person’s trust or private foundation it clearly and completely states who will get what and under what circumstances.
With each passing year it becomes more important for anyone with assets to think about how his or her assets will be distributed after passing. Fortunately, more and more people are realizing that estate planning is an essential part of financial planning and that trusts and private foundations are a superior choice. Certainly estate planning is one of the most important decisions you will ever make for yourself and your family and we are here to help you in any way we can.