Groups » The Importance of Educating Clients About Probate and Financial Planning

In some cases, the first opportunity that American’s have to learn about probate law is when they are faced with experiencing the consequence, expense and administrative delay first hand. By the time they are required to learn about the legal process, they are already in the midst of the brunt of inconveniences and litigation, and unable to avoid it.

What is the due diligence that a law professional owes all clients, regardless of legal specialty? While your practice may not specialize in financial planning, or probate representation, helping clients avoid the process by personally assisting or referring them to estate planning specialists is a reasonable expectation. We will explain the pitfalls of probate, and how to connect your client to resources and provide advice to help them avoid the pitfalls of probate litigation.

Explaining Probate in Client Terms

There are many legal avenues that can result in probate action, and the best approach is to educate your client on the scenarios and repercussions involved, in terms of financial risk and inconvenience. The conversation should start by informing clients that probate is a legal process that distributes the assets (property and liquid wealth) through the court system, in the absence of a legal will that would outline instructions.

It is assumed by many that property and wealth will be distributed directly to children, which is the case in many instances. But what if the client has no children? What if the next of kin are deceased, or estranged from the client? This is where probate law steps in to ensure that debts are reconciled, and that property exchanges hands as the deceased may have wanted.

Without a last will and testament however, the court must anticipate and independently judge where to allocate any net assets that are left after consolidation of debts. In terms of determining inheritance, would the family home be automatically deeded to a relative? Probably not, especially if the estate enters into probate and is contested by a number of family members or friends. The needs and preferences of the deceased cannot be considered, if there is no written documentation and instruction for asset allocation.

In layman’s terms, the court will decide who inherits all assets and property, which may be contradictory to the wishes and intention of the deceased. Family members may share their recommendations, but the wishes of surviving next of kin may or may not impact asset allocation. This is why estate planning is critical for families; it helps to eliminate the risk. There is also no way to determine the maximum length, or anticipated delay of probate when families or inheritors need access to funds and financial support, which can place family members in a state of financial crises.

How Seniors Are Impacted by Probate

Probate proceedings are a matter of public record. This can pose a threat to seniors, whereby property and assets are listed and can be reviewed by individuals outside of the family or immediate caregiving circle. The public declaration of property under contention in probate can put senior citizens at increased risk of burglary, extortion or fraud.

When one spouse dies, the immediate assets are inherited by the surviving spouse, as most property is held in name by both individuals. Many seniors are dismayed to learn that assets may not appropriate directly to surviving children or relatives without a will (unlike the transfer of property to a surviving spouse) and the estate can be subjected to significant expenses, if moderated through probate proceedings.

Recommending a Living Trust

In some families, the existence of a legal and updated last will and testament may not be enough to protect your client against economic adversity, should he or she be unable to care for themselves. The ‘inter vivos’ or revocable trust is an option that can help families avoid costly probate action, leaving a greater portion of the net assets for inheritance.

Establishing a living trust does not enforce it, or effectively place financial assets within the trust. After naming a successor trustee who will represent the estate, equity and assets must be placed within the trust in order to be protected.

The transfer of assets includes management authority for:

• bank accounts


• investments


• real estate


• jewellery


• other non-liquid items and valuables

During the process of establishing a living trust, clients should be advised to change the legal beneficiary details for all life insurance policies, IRA and the 401(k) plan, as well as a contingency to include any other assets that are acquired after the enforcement of the living trust, to be dispersed through the successor trustee in good faith.

The key benefit of establishing a living trust is reducing the amount of time between the execution of the trust and the distribution of assets to the next of kin, or inheritors named within the trust. Probate cases that are contested can take months or even years to resolve in court, whereas a living trust allows access to funds and property to the inheritors within weeks, according to Austin probate lawyers.

A Moral Obligation

Whether your long-term client has approached you to discuss estate planning or not, legal professionals do have a moral obligation to offer advice and resources to help clients avoid costly litigation and probate. Consider that it is a lack of understanding of the process of asset allocation after death, that typically prevents Americans from taking the next step, to not only protect their assets from being diminished by legal fees in probate, but also to ensure that next of kin are not placed in undue hardship, as a result of waiting through the long process of reconciliation in court.

If your client is unwilling to have the conversation about estate planning, offer them resources that help to educate and keep them informed of the risks. There are free podcasts available, such as “Smart Planning 101” by Best Selling Author and Attorney Nicole Wipp, that make learning about responsible estate planning and pitfalls easy and accessible. The American Institute of CPA’s also provides digital e-books and resources that can be purchased and downloaded.