PROBATE is the court process for adjudicating and administering the purposes of a will. Unfortunately, for many families probate has also often meant exhausting months or years waiting for final judicial action regarding an estate - along with huge court costs, lawyer payments, and executor fees. At the very least, probate costs can run from 1 to 8 percent of an estate's value.
That's why many financial experts say it is imperative for a person drafting a will or contemplating eventual disposition of his or her estate to sit down with an estate planner, financial adviser, lawyer, or tax specialist long before the need for probate arises.
Careful preplanning can save heirs substantial costs and reduce time spent dealing with court matters.
Probate processes vary from state to state. In some large-population industrial states such as California and New York, probate can often lead to extensive legal complications, says John McCabe, legislative director with the National Conference of Commissioners on Uniform State Law, known as the ULC. In other states, such as Connecticut, Idaho, Florida, and South Carolina, probate can move more quickly and be less costly, either because of legal simplifications taken by the state itself or because the state has adopted the model probate code drafted by the ULC, based in Chicago. Currently, 16 states have adopted the ULC code, which seeks to reform and simplify probate law (see box). The American Association of Retired Persons (AARP), a senior citizen's group, is one of many organizations advocating enactment of the code by all states.
No single newspaper article, such as this one, can substitute for sound legal advice regarding a subject as complicated as probate. Only your lawyer or financial professional can do that. But an article can spell out the main alternatives for dealing with probate.
The starting point is to find out how probate is handled in your state, says Deena Katz, president of Evensky, Brown & Katz, an investment advisory firm in Coral Gables, Fla. In Florida, for example, ''probate has been greatly simplified,'' and an estate can be adjudicated in well under a year with modest court costs, she says.
Wherever they live, people have two main options: (1) having their estate go through probate or (2) avoiding probate entirely and instead directing the disposition of an estate through a trust arrangement, Ms. Katz says.
Probate. Basically, property where no right of survivorship is specified (as occurs in life-insurance products) goes through probate. If a person must deal with an estate through probate, he can do so directly - that is, by following the formal state procedures - or, alternatively, he can seek a simplified version of probate, if the state provides it. Simplified approaches include what is called an ''affidavit,'' or summary administration of an estate. Affidavit administration kicks into place when the estate is small, typically under $100,000. Affidavit administration can usually be resolved in a few months.
If a person dies without a will, then the disposition of his estate is handled under ''intestate'' laws. An interested party, such as an heir, must file an ''intestacy form'' to begin the probate process.
Trust arrangements. A trust is designed to allow a person to pass along an estate to heirs without having the estate go through probate. ''Setting up a trust is as important as possible for most people,'' says Suze Orman, who heads up Suze Orman Financial Group, an advisory firm in Emeryville, Calif. ''Ninety-nine percent of all people should use a trust. No one who has ever gone through probate will tell you that they would want to do it again.''
Three of the most common trusts involving estates are:
* Revocable living trusts, where the person setting it up can change it or end it while still alive.
* Irrevocable trusts, which can't be altered or terminated but which reduce estate taxes substantially.
* Bypass trusts, sometimes called ''A/B trusts,'' in which affluent couples virtually double the standard exclusion - the amount of the estate that is not taxed by the IRS under the gift tax.
Currently, an estate valued at $600,000 or less is not taxed. Under an A/B Trust, a couple uses trusts so that each spouse essentially gets that exclusion, thus bequeathing $1.2 million free of estate tax.
Setting up a trust can thus be financially advantageous and not necessarily expensive. While wills typically cost $50 to $250 or more to prepare, a trust can run from around $250 up to $1,500, depending on its complexity, Orman says.
Besides expediting disposition of the estate, a trust avoids some of the worst pitfalls of probate. In probate, for example, the death of the benefactor must be published. All financial records become public documents. Any person could immediately claim a legal right against the estate. But a trust is private. The value of the estate need not be made public.
''Many lawyers advise their clients not to set up a trust and instead urge them to go through probate,'' Orman says. ''But you must remember that many lawyers tend to make large fees through the probate process, far more than from merely setting up a trust.''
Helpful publications on probate include ''You've Earned It, Don't Lose It,'' by Suze Orman (Newmarket Press, $22); ''The Money Book of Personal Finance'' (Warner, $29.95); and a free pamphlet from the AARP, ''A Consumer's Guide to Probate,'' available by writing AARP, Fulfillment Office, 601. E St. N.W., Washington, DC, 20049. Ask for pamphlet D-13822.