Many people have heard of probate, and those who have heard of the word likely know that they want to avoid it. You also might be uncertain about why you should avoid probate, as well as what probate entails. Unfortunately, if probate is not properly anticipated, it can be unexpectedly costly as well as time-consuming. Here are some reasons why it can prove advantageous to create assets that bypass probate as well as the downside of what the process entails.
What Probate Means
Probate is the legal process that occurs after someone passes away. Overseen by a court, probate is a multi-step process. The probate process involves establishing in court that a deceased person’s will is valid and then identifying and inventorying the deceased person’s property. Subsequently, property is assessed to determine its value. Afterward, any outstanding debts or taxes are paid off. Lastly, the remaining assets in the deceased person’s estate will be distributed either according to the terms of a will or according to state law if no will exists or a will has not been established as valid. The probate process involves a substantial amount of paperwork as well as the appearances of lawyers.
The purpose of probate is to make sure that a deceased person’s debts are paid off and that assets are properly distributed. Probate also involves the legal transfer of a deceased individual’s estate to beneficiaries.
Ways to Avoid Probate
One of the most common questions asked of estate planners is what clients can do to avoid the probate process. There are several common strategies that can be utilized to avoid unnecessary time and expense spent on distributing your estate:
First, a person can create a revocable living trust . Revocable living trusts permit a person to transfer assets to a trust, through a process referred to as “funding” the trust. After the assets are placed in the trust, they avoid going through probate. This is because these assets are dictated by the terms of the trust rather than the will. This allows assets that are funded to the trust to pass through the trust to beneficiaries without any court interference or probate.
Another option is creating a will but utilizing beneficiary designations on all of the assets in a person’s estate. Another option for avoiding probate is utilizing beneficiary designations for assets. A large number of assets including bank, investment, and retirement accounts can utilize beneficiary designations. Many times, these beneficiary designations are described as either “transfer-on-death” or “payable-on-death.” Beneficiary designations allow the beneficiary of the asset to provide a death certificate and depending on the type of asset, some kind of follow-up information and then title is passed onto them. In a similar way, beneficiary designations can also avoid probate.
Both of these choices can be used so assets avoid probate.
Contact an Experienced Estate Planning Attorney
Attorney Jim A Lyon is an experienced estate planning attorney who has the knowledge and skills necessary to help guide clients through the probate process. Contact attorney Lyon today to schedule a free case evaluation.