In the absence of a will or an estate plan, the loved ones of a deceased person have to face a lot of trouble in getting his/her assets. The first and foremost trouble is the probate which is an expensive process and wastes a lot of time of the heirs. Every year many people spend millions on lawyers and the court fees of probate upon the death of their loved one.
An estate planning is a must for everyone to secure your loved ones and to ensure that assets are properly dispensed to the heirs without a loss of wealth. Hence, in order to refrain from probate, estate planning is essential so that your wealth and belongings must be dispensed to your inheritors on time without wastage of money.
Probate is known as the method of verification of a dead person’s last will, to verify no one is contesting it, and giving judgment over any disputes and dues over the estate. Probate is done in the court of the state where the person was residing at the time of death.
How to avoid unnecessary probate?
In the absence of a valid will which is known as intestacy, the estate needs to pass through the state intestacy law which provides half of the assets to the surviving partner while the rest is divided between the children. If a will is left by the deceased person, then also, the will need to pass through probate which provides a chance to challenge the will, check the validity of the will while questioning the mental ability of the deceased person.
May it be either of the reason the proceedings consume a lot of time and money which need to be paid by your inheritors. Also, the property is frozen until the court provides its judgment over the estate distribution. As mentioned the probate takes place irrespective of the fact that you have a will or not, hence, it is advised to look for other methods to help your heirs avoid probate.
1. Trust: The easiest method to bypass probate is to place a revocable living trust for which you need to set up an agreement and then entitle the property’s ownership to the trusts which are then managed by an appointed person who is referred as a trustee. You can either name yourself or another person or some bank as the trustee. You can also assign a successor trustee who will manage the trust in the absence of the trustee. It is always advised to designated alternate beneficiaries apart from the main beneficiaries to avoid waiting period and protect your assets from challenges in the court. The probate is avoided by the trust as the property is entitled in the name of trust which can never die, however, it will dispense your assets to our beneficiaries without the involvement of the court.
2. Transfer on death accounts: Such accounts permit you to appoint beneficiaries to avoid proceedings of the probate. It is very simple and cost-free to be created and the beneficiaries can easily claim the wealth after the owner’s death. To add the name of the beneficiary to the accounts is allowed in most of the firms, banks, etc., however, it needs some extra paperwork and time and required to be asked and followed up continuously with these institutes.
3. Update beneficiaries of the accounts: You must review and update the beneficiaries of the accounts such as insurance policies, saving accounts, etc. These accounts are not influenced by any other document like a will, so whoever be the beneficiary in these accounts will only get the money after your demise. Hence, the beneficiaries must be updated according to your current wishes.
4. Make gifts: The estate law permits you to provide your inheritors as much as $15,000 per individual every year without paying a gift tax. Gifting while you are alive supports you to decrease your probate cost after your demise as it depends on the economic value of the assets which pass through the probate.
5. Joint tenancy: Joint tenancy by entirety and with right of survivorship permits you to avoid and bypass the probate. If you have any of your property like account, house, vehicle, etc., in joint tenancy then the ownership of the property will automatically transfer to the surviving partner after your demise. However, it is to be noted that in joint tenancy you have to leave half of your property’s ownership.
You can opt for any of the aforementioned tools in your estate plan to avoid probate and help your family to be secured from the burdensome, expensive and time-wasting process. However, you can also draft a will to check if anything or any aspect has been overlooked.