I talked in my last blog about the reasons you should consider probate avoidance as part of your estate planning. Today I am going to review some of the dos and don’ts of putting a probate avoidance plan into place.
If you are interested in finding ways to avoid probate, the good news is that you have many different options that are available to you. In my experience, there usually is a clear best choice for avoiding probate — but it will differ depending up the particular asset. The estate planning attorneys at Clarity Legal Group can help you understand the different approaches and which choice is best in order to ensure your assets transfer outside of the probate process.
Taking steps to allow your loved ones to avoid probate must be done before you become of unsound mind and unable to make an estate plan. After a loved one has already passed away, you typically cannot avoid the probate process and will need to use probate to wind up the affairs of the estate and facilitate the transfer of assets. That’s why it is so important to reach out to Clarity Legal Group today to find out about the assistance our firm can offer in putting your plans in place before it is too late.
Ways to Avoid Probate
Some of the key ways to avoid probate include:
- Placing assets into a trust: Assets that are held in trust can pass through the trust administration process instead of through the probate process. This is typically — although not always — through the use of what is referred to as a Living Trust. It is possible for those trust assets to be transferred entirely outside of the court process as long as no problems arise during trust administration. This approach will save time, money, and the transfer of assets can happen more quickly. With a trust, you are in charge, as you have defined who gets what, when they get it, and who is in charge of managing your assets and instructions.
- Inter vivos gifts: Giving away money and property during your lifetime can reduce the size of your estate so probate proceedings may not become necessary. The downside of giving away your assets during your lifetime is that you impoverish yourself and may not have enough assets to live on. You should not give real estate or financial assets other than cash away without first consulting your estate planning attorney or CPA to ensure that you are not making a tax mistake. Depending upon when and how you give away wealth, you could also cause yourself to become temporarily disqualified from receiving Medicaid coverage. This could be a problem if you need Medicaid to pay for the costs of nursing home care.
- Pay-on-death accounts: For some types of assets, you can set up your accounts so wealth automatically transfers to new owners after your death. The assets that are in the pay-on-death account or transfer-on-death account can pass to the designated owner outside of probate. This approach is not ideal, mainly because it does not thoughtfully account for contingencies which might unexpectedly defeat your intentions, such as the unexpected death of a beneficiary or health or financial problems of those who might inherit in this way.
- Joint ownership: If you own property jointly with someone else and the ownership is structured with rights of survivorship, the jointly owned asset should pass on without the probate process. While this can work, it presents no advantage over the other approaches I have discussed and comes with significant potential problems. I strongly believe you should never own anything jointly with right of survivorship with any person other than your spouse as part of an estate plan. If you’d like to know more about why, email me or call as described below.
These are just some of the key ways that through thoughtful estate planning you can avoid the probate process. Depending upon the nature of the assets you are trying to transfer and the circumstances of your family situation, there may be other tools and other processes that you can use. Any of the Estate Planning Attorneys at Clarity Legal Group can help you to explore the different techniques that are available to you for avoiding the probate process.
Why Avoid Probate
It is important to take steps to avoid probate because you want to ensure that you make the process of transferring assets as easy on your heirs or beneficiaries as possible. When you take steps to avoid probate, your loved ones can inherit assets more quickly, more cost effectively, and without the stress of court proceedings. You can also ensure that your assets aren’t lost due to mismanagement as the transfer of wealth to heirs or beneficiaries is delayed, and can maximize the chances your wishes will be respected. Oh, and probate avoidance will save money also.
Getting Help from an Estate Planning Lawyer
An estate planning lawyer at Clarity Legal Group will help you take all of the steps necessary to allow your heirs or beneficiaries to avoid the probate process so your hard earned wealth can quickly pass according to your wishes. To find out more about how our firm can help you, give us a call at 919-484-0012 or contact us online today.
Latest posts by by Mark Costley (see all)
- Why You Need to Update Your Estate Plan after a Divorce - June 4, 2019
- How to Pick Your Trustee - May 28, 2019
- How Can I Use a Trust to Protect My Minor Child’s Inheritance? - February 12, 2019