Probate, Joint Ownership & Durable Power of Attorney

Probate is expensive, time consuming and public. In California, statutory fees for a $200,000 estate are $14,000 - $7,000 for the attorney and another $7,000 for the personal representative. These fees do not include court costs and other expenses; for example, tax return preparation. Probate can take anywhere from nine months to two years or more. All the records of your estate are publicly available for anybody to read, including those who may not have your survivors' best interests at heart. The probate process takes control out of your family's hands.

Joint ownership does not avoid probate - it usually just postpones it. When the first owner dies, the surviving owner becomes the owner without probate. However, if both owners die at the same time, or if the surviving owner does not replace the deceased joint owner, there will be probate at the second death. You lose control with joint ownership. You could lose an asset to the joint owner's creditors. There are gift and/or income tax consequences to joint ownership. Further, a will fails to control jointly-owned property, and there could be "unintended heirs." Some assets require all the owners' signatures. If a co-owner becomes disabled, the court will probably become involved should you wish to sell or refinance.

A durable power of attorney can give someone authority to handle your finances should you become disabled. However, a power of attorney is like a "blank check," allowing the agent to do anything without your guidelines. Further, many financial institutions won't honor powers of attorney that are not on their on forms. A power of attorney can work well in conjunction with a living trust; however, it is risky in and of itself.