Probate and Estate Planning

Estate Dispatch Probate and Estate Planning

First, you need to be aware that there is a difference between probate and non-probate assets.

When someone dies with an estate (any property or money left after all debts are paid), probate must be used to legally transfer ownership of the deceased’s estate to their beneficiaries (the people who inherit the property). A Probate Attorney will guide you in a difficult time with the probate process. Don’t try to go it alone. Get the help of an experienced probate attorney.

If someone leaves behind non-probate assets, such as life insurance proceeds, retirement accounts like 401(k)s and IRAs, shares in jointly held bank accounts, stocks, bonds, mutual funds, vehicles (and other tangible personal property which isn’t real estate), then these assets will generally pass directly into the hands of named beneficiaries without passing through any court system at all.

Many times this can happen completely outside of probate.

A will is a legal document that dictates what happens to your assets after your death. If you draft one, it becomes the controlling document in the probate process and goes through probate. No other documents need to be filed in court and usually, no witnesses need to testify in order for a will to go through probate.

However, in some states, at least two witnesses are required who knew the deceased person during their lifetime.

If there is no will, then the intestacy laws of the state where you lived at the time of your death control who gets your property and how much they get.

The good news about this is that it’s usually your immediate family that inherits from you. The bad news is, if there’s no will, a family member you don’t even know could get part of your estate.

Now that you know a little about what probate is, let’s take a look at some ways you can avoid it.

One way to avoid probate is by using payable-on-death (POD) or transfer-on-death (TOD) designations for assets like bank accounts and stocks. With these designations in place, the asset goes directly to the beneficiary without having to through probate.

There are also estate planning techniques, such as living trusts, which can help you avoid probate.

Living trusts are legal documents that spell out who will receive your property after you die. You can also name a trustee who will be in charge of managing your trust and distributing the property to your beneficiaries.

The great thing about living trusts is that they allow you to bypass probate. Your assets are transferred to the trust immediately upon your death, and the trustee can start distributing the property to your beneficiaries without having to go through any court proceedings.

So how do you avoid probate? There are several ways to avoid probate and save money or time. One way is to set up a living trust, also referred to as a revocable living trust.

This is probably the most common method of avoiding probate, and it’s effectively a huge cost savings; that is, unless you need to create an entirely new trust document.

Not only does this type of arrangement avoid probate when you die (because the successor trustee manages your property in accordance with your wishes), but it can greatly simplify life while you’re still alive by allowing for more privacy and avoiding the need to be constantly updating (or continually hiring someone else to update) your will.

Other methods of avoiding probate include transferring non-probate assets during life, placing property in joint tenancy, creating beneficiary designations for retirement accounts and life insurance policies, or simply leaving everything to a spouse.

Note that even if you do set up a trust, it’s still important to create an updated pour-over will; otherwise, provisions within the trust agreement may not be adhered to when you die.

A lot of people feel there is little point in going through all the work involved with creating a living trust just for the sake of saving on legal costs associated with probate, especially because many states now have streamlined probate processes. However, even with summary probate, the costs of simple probate can still cost thousands of dollars more than a revocable living trust centered estate plan.

If you want to avoid probate for other reasons (perhaps you’re uncomfortable with the idea of a stranger going through your personal belongings, or you simply don’t want the hassle), setting up a living trust is still your best bet.

Of course, it’s always important to speak with a probate attorney who can help you navigate these waters and ensure that your estate plan is tailored specifically to your needs.

The bottom line is that probate isn’t necessary for everyone, but it’s still important to keep in mind when you’re creating your estate plan.