The probate process can sometimes last for a long period of time, especially for complicated estates. Assets must be valued, creditors and taxes paid and assets and property distributed to beneficiaries. During the probate process, there is a risk that the value of the estate could be adversely impacted unless proper estate planning occurred before death.
A probate attorney can help to move the process of probating the estate along as quickly as possible. An attorney can represent the executor or beneficiaries to the estate and help them to protect the value of their inheritance.
Risk of Lost Asset Value During Probate
Forbes recently wrote about the importance of a good estate plan to protect the value of an estate after death. While most people who engage in advanced estate planning do so because they want to avoid estate taxes, the reality is that taxes are not the only thing that could reduce the value of a beneficiary's inheritance.
Many more people, however, potentially face the risk that assets will decline in value after death both before and during the probate process. For example:
- If the key asset in an estate is a business, the business may be reliant on its founder for its success. If the founder becomes disabled or dies, the value of the business can plummet quickly. As a result, the primary asset in the estate could end up not being worth any more than the liquidation value of business assets. If the probate process takes a long time and there is a delay in getting new leadership, this risk is increased exponentially.
- Loss of share value may reduce an inheritance significantly. Between the date of a shareholder's death and the distribution of ownership shares to designated beneficiaries, the business could decline in value significantly. If there are disputes in probate or questions about ownership and leadership after the owner's death, then the stock could plummet. The shares, which were intended to be handed down to beneficiaries as valuable assets, could become virtually worthless even if they were worth a lot before death.
- Liquidity issues could adversely impact a business that is supposed to be passed on to heirs. Business owners need to ensure that there is enough liquidity to carry the company through to the time when distributions occur to beneficiaries. The longer the probate process takes, the more risk there is that a business will run out of the funds necessary for ongoing operations. This, in turn, can cause a business to significantly lose its value or even to become nonoperational.
These issues could be avoided with a proper estate plan and could be exacerbated if there are disputes, problems or delays during probate. It is important for beneficiaries and executors to understand the risk to the value of the estate and to get help from a qualified probate attorney who can work to ensure the probate process goes as smoothly as possible.
Contact Bertolino LLP at 800-210-0126 or visit https://www.belolaw.com to schedule a consultation with a probate lawyer today.