Avoiding Probate #5 – Children or Creditors?

Part Five in our series, Reasons to Avoid Probate, deals with the harsh impact that the Probate process has on families with Minor Children.

In each of the first four parts of this series, we dealt with issues that affect all Estates that go through Probate – the High Cost of Probate, the Public Nature of the Probate Process, the Time Consuming nature of Probate, the Bureaucratic Nightmare of Probate.

However, now we will focus on how the Probate process affects Families with Minor Children.

From a practical perspective, once the Parents of a minor child die, the vast majority of all bank accounts, financial accounts and other sources of revenue shut off completely.

Unless these accounts are set up in Joint Tenancy – or there is some other reason a bank or financial institution will keep it open – most accounts terminate when the account holder dies.

In real terms, the person who has been nominated as Guardian for the Minor Children will experience difficulty and delay in accessing the parent’s money for the care and support of the children.

Usually, banks or financial institutions will want to see Letters Testamentary before they allow a Guardian to access the money.

However, Letters don’t issue immediately upon the death of the parents, rather they issue only on the opening of the Estate.

If there is a delay in opening the Estate – for instance if there is a challenge as to who should serve as Personal Representative – it can delay the availability of money for the minor children.

Now, the Probate process has created a procedure for allowing money to be distributed to the Guardian of the Minor Children during the Probate process.

This is called the Family Allowance, and may be available to the Guardian upon petitioning the Probate Court.  The Family Allowance is based upon the needs of the Minor Children, but it is doled out as a monthly stipend.

What this means for Families is that, in the Probate process, the Guardian will almost never have immediate and unrestricted access to all of the Parents funds for the care and support of their children.

Clients often ask us:  Why is the Probate process so difficult on families?

The answer is simple:  Probate is not primarily designed to serve the needs of the Decedent’s children, but rather the needs of their Creditors.

However, we have yet to meet a Parent who puts the needs of their Creditors ahead of the needs of their Children.

And yet, in many cases, this is exactly what the Probate process does.

Reason enough to Avoid Probate.