A client visited with me this month and we discussed whether probate (the process in which a will is proven and used) was a good idea for his parents. Here was my summary.
Probate is not a good or bad thing. It has its good points and bad points, but is not inherently one thing or another.
Probate cons:
- Takes longer (7 to 12 months, minimum),
- is public,
- requires an attorney,
- involves the court in many decisions,
- may require hearings,
- creditors get paid first, and
- can be expensive (Arkansas attorney’s fees are approximately 3% of all assets that pass through the probate).
Probate pros:
- only one person needs to sign any document,
- only one person is in charge,
- closes off creditors’ claims after probate closes, and
- is generally transparent so that everyone knows what is going on (because everything is public).
In your parents’ case, you are concerned about conflict with your brother. If working with your brother is difficult, then having one person be in charge is a good thing. Additionally, having the court approve all actions takes any blame off of you—the judge would not approve an illegal act.
If working with your brother is not difficult, then the house can be distributed by beneficiary deed. A beneficiary deed does not become effective until the death of both of your parents and would transfer the house outright, immediately after your parents’ death, without the need for probate. If the two of you own the house together, then you must work together to manage, maintain, pay expenses, and eventually sell the house. Additionally, in Arkansas, spouses would also have to sign all deeds which could pose problems if you or your brother is in the middle of a divorce.
A will can be contested in probate. Because your parents’ wills divide everything equally between you two, there would be no benefit to contesting it (no one would get more by challenging the will).
Another reason for your parents’ having a will is that they want to make some specific gifts to a church and to grandchildren. The only way to insure that the gifts are made after their deaths is to send the estate through probate with a will.
Although a trust could solve many of these issues as well, I think that it is more than your parents need.