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Probate is the process that the state uses to identify assets within a decedent’s estate for purposes of determining tax liability, executing the will and distributing property to beneficiaries and heirs. If no will exists, the probate process provides for the orderly payment of claims from the estate and disposal of the assets of the estate. The process of probating an estate can entail three drawbacks…publicity, delay, and expense…none of which an annuity is subject to.

Publicity
The probate process requires that, upon the death of an estate owner, notice be given to all interested parties – such as relatives and creditors – so that they may bring forth their claims against the estate. Though most states allow notification through either letter or publication, most estates are publicly probated by publishing a notice in local newspapers.

Delay
The minimum delay in probating an estate is six months from the date of the last notice. As such, the probate process can take years, as creditors and others with an interest in the decedent’s estate are offered an opportunity to stake their claim to the assets of the estate. This means that heirs and beneficiaries of the estate property subject to probate must wait until the process is complete before they receive their bequests.

Expense
Finally, the cost of the probate process can be exorbitant. All assets within the probated estate are subject to fees. Typically, those fees are assessed by attorneys or executors who usually charge a percentage of the probated estate for their services. In addition, there may be costs for conservators and appraisers as well as other costs deemed appropriate by the probate court. Annuities avoid all of these problems because the annuity is a contract issued by a life insurance company. As such, its proceeds pass directly and immediately to the named beneficiary by virtue of the provisions of the contract, and not through the process of probate.



Last Updated: 9/23/2012 10:05:00 PM