What Is Probate? How Can You Avoid It?
What will happen to your property when you are no longer here? How will your properties, assets and valuables be transferred after you pass on?
Many people think that their families will receive the benefits of what Estate Planning they have created easily and efficiently. However, transfer of property is not always an effortless procedure. You can make sure your wishes are more promptly and accurately carried out by arranging your estate so that you may avoid the process of probate.
What is Probate?
Probate is the name of the administrative procedure in which a deceased person’s estate is transferred to beneficiaries and heirs.
Your probate estate is the total of all property owned by you at the time of your death, plus the property acquired by your estate after your death.
If you die testate (with a valid will), the probate court is supposed to distribute your assets to your beneficiaries in accordance with the directions in your will. If you dies intestate (without a will), your home state’s succession guidelines determine the distribution of your property to your heirs. This can often lead to a distribution that is not the way you had wished.
Why You May Want to Avoid Probate
If your property goes through the probate process, it can add on to the stress and emotions during what is a very fragile time.
The probate process not only involves the executor of your estate, but also attorneys, accountants, realtors, financial planners that the administrator may hire to help work through this process. The services of these people can end up being very expensive.
The probate process can be a very stressful ordeal with family, friends and administrators disagreeing over the assets, debts and all aspects of your probate estate. Avoiding probate means avoiding many of these battles.
Probate can take several months or even years. From the filing of the application, to the collection of data, to calculating your assets and debts, to filing of an inventory with the court, to the payment of your debts, to filing income tax return, and then to a distribution of the remaining assets – the probate process can drag on! And during this time your assets are essentially frozen and cannot be transferred.
How to Avoid Probate
If you understand what property items can be probate assets, you will be able to understand how you can avoid probate court
If you have an asset that is joined with someone else, that particular asset will go to the joint owner after your death. You will not have to go through a probate if there is joint ownership in an asset. There usually is joint ownership on a checking account or a deed.
Many people choose to use a living trust as a way to avoid probate. Property that is left behind through a living trust can be given to the beneficiaries without the need of probate.
The Living Trust document should list all of the property, list who will be the trustee, and list the person who will get the property when the individual passes away. The trustee is someone who will be responsible for taking care of the property.
While a Living Trust is usually more expensive to draft than a Will, it is also almost always less expensive than going through the probate process.
For retirement accounts and life insurance, you can name a person who will receive the benefits after you have gone. You can usually name a primary beneficiary and contingent beneficiaries and can also divide the amount in percentages.
When considering your estate plan, you should clearly define your wishes and make sure to use an experienced Estate Planning attorney.