Probate is difficult enough under the best of circumstances. It’s a lot of confusing paperwork, back and forth with the Surrogate’s Court, and months of delay before an executor is finally empowered to act on behalf of an estate - it’s many months longer before they can actually give out an inheritance.
When an estate includes real estate, the problem is amplified. Real estate needs to be “fed”, so to speak. There are typically real estate taxes and mortgage payments to be made. In condominiums, there are common charges which have to be paid. There’s also the physical condition of the property - who takes care of its upkeep? What happens when the homeowner passes away?
The answer to these questions varies based on each situation, but either someone has to float the estate by going out of pocket - which isn’t ideal - or no one takes care of these things and the property may fall into foreclosure or disrepair.
It’s for these reasons, and more, that I typically recommend homeowners do their estate planning through a living trust. Check out this earlier post if you want to understand more broadly how trusts work. In short, property held in trust passes directly to a beneficiary when the owner dies, completely bypassing probate. This accomplishes a series of valuable goals.
Financial Savings
Getting the property to a beneficiary through a trust saves a court filing fee ($1250 for any New York real estate valued over $500,000) and saves the legal fees associated with probate (often in excess of $10,000).
Time Savings
As a beneficiary decides whether to keep the property or sell it, it’s better to be able to make that choice from a position of strength. The real estate market can shift suddenly, and being unable to sell immediately can be very costly. I’ve probated several estates in the last few years where the property values shifted by hundreds of thousands of dollars between when an owner died and when a beneficiary had that right to sell it. That would not have happened had the planning been done through a trust.
Considerations of Grief
Planning through a trust is also a more compassionate form of planning. When losing a loved one, the last thing anyone wants to do is have to maneuver through a complex and bureaucratic administrative process. A trust spares those loved ones that burden and allows them to grieve without compounding the frustration many feel after such a loss.
To summarize, owners of real estate should seriously consider taking care of their estate planning through a trust. It can save time, money, and frustration in a time of mourning. If you have any questions, please reach out to me. I’d be happy to talk through things in more detail.