Mitigating Probate Costs

Abstract

Abstract: This paper provides a discussion of the political economy of probate, with the goal of motivating financial planners to play an important role in helping their clients avoid it. The paper explores the reluctance among members of the legal community to adequately apprise their clients of the financial and emotional costs of probate and the legal mechanisms available to mitigate those costs. The paper encourages financial planners to identify lawyers who specialize in preparing living trusts for clients at a reasonable cost. The financial planner can vet these lawyers’ competencies as a basis for referring clients to them. The financial planner can also educate their clients in these matters, as the paper’s thesis is that the living trust is a grossly underutilized resource, especially among middle-class Americans. This paper provides information that should be useful in equipping financial planners with a resource they can use to educate their clients so they can adequately weigh the costs of preparing and funding a living trust against the costs associated with their estates passing through probate.

Keywords: financial planning, estate planning, probate, living trusts

JEL Classification: A22, D11, D14