Probate is the legal process of estate administration, and when you hear some of the details about it you may wonder if it is possible to avoid it.
One of the things about probate that is disturbing to many people is the fact that it can be time-consuming. Your loved ones do notreceive their inheritances until the estate has been probated and closed when you maintain personal ownership of probate property.
In some cases immediate liquidity is very much needed. And, even if it is not absolutely needed who wants to wait for months or even years for an inheritance?
Probate can also be expensive, considering the fact that there are court costs, executor fees, legal expenses, accounting charges, liquidation and appraisal costs, and other random expenses. This can shave down the value of the estate by a few percentage points.
Another thing about probate that is not entirely positive is the fact that it is an open proceeding. Any interested party could access the probate records. You may feel as though the way that you decided to distribute your assets is nobody’s business but your own.
Strategies toAvoid Probate
The good news is that you can indeed implement probate avoidance strategies. There are a number of different ways to get assets into the hands of your family outside of probate.
One possibility is the creation of payable on death or transfer on death accounts. With these accounts, that are offered by banks and brokerages, you simply name a beneficiary or beneficiaries. When you die the person named on the account as a beneficiary will assume ownership of the funds. However, he or she can’t touch the assets while you are still alive.
It is also possible to avoid probate by adding someone as a co-owner of your property. This is called joint tenancy with right of survivorship.
Though it is possible to avoid probate using these strategies there are certain problems with them. Many would say that the best way to avoid probate would be through the creation of a revocable living trust.
You simply convey assets into the trust and name a trustee and a beneficiary or multiple beneficiaries. After you pass away the trustee will follow the instructions that you left behind in the trust agreement, making distributions to the beneficiary or beneficiaries.
Once you convey assets into the revocable living trust they are no longer considered to be probate assets. As a result of this the asset transfers that take place after you pass away are not subject to the probate process.
This is a brief look at a few of the probate avoidance tools that exist. To learn more, contact our firm to request a free consultation.