Planning for your death is an unfortunate part of life. It is even more important if you have several people who may have an interest in your estate.
Beyond having a will and some life insurance, you might want to lay a framework for your finances after you die. If you are smart about it, your family might even be able to avoid the probate process. This will make things much easier for them when dealing with your finances.
What is Probate?
Probate is the process of distributing a person’s estate after they die. A probate lawyer is often necessary to administrate this process. Probate can vary considerably depending on the circumstances and jurisdiction. In general, the process involves assessing the decedent’s estate, reviewing and validating the relevant documents and asset distribution.
Most people would prefer to avoid probate if possible. It is a public process that can get messy if the estate is not in order at the time of the individual’s death. It can also be expensive and time-consuming. Depending on the issues, the attorney fees can be significant. Going to probate court can also take many months to complete.
This is why many people take significant steps to keep their estates out of probate court. Even if keeping the estate out of probate is not possible, there is a lot that can be done to make the process faster, simpler, and less expensive. If you want to make you’re the lives of your family members easier in the months following your death, it is a good idea to take some of the following steps.
Establish a Living Trust
A living trust can be one of the smartest moves you make if you are trying to avoid the probate process. Sidestepping the probate process is one of the primary purposes of creating a living trust. A living trust achieves this by taking the assets out of your legal ownership while you are still alive. You distribute the assets to your trust while you are alive, and the trustee distributes the assets to your heirs after your death.
Establishing the trust will require the services of an attorney. You will need to set the trust up and assign a trustee. Once the assets are in the trust, you will still have control over them, but they will be the legal property of this new entity you created. You will also have the right to revoke or alter the trust at any time before you die.
Maintain Joint Ownership
Holding property jointly is another way to keep your estate out of probate. If you have a spouse, this process will occur automatically for many assets. However, it can’t hurt to make sure joint ownership is official and documented. This could help your spouse avoid any issues that may come up in the event of your death.
You could also consider holding property jointly with one or more of your children. With your children named as joint owners of the property and financial accounts, the assets will go to them in the event of your death. This can help you avoid probate court and make the process much easier for your heirs.
Distribute Your Estate Before You Die
You can avoid probate if you can reduce the size of your estate before you die. Estates under a certain dollar value are exempt from the probate process. Even if you can’t get the estate below that threshold, probate is generally easier for smaller estates. This makes it a good idea to give assets away to your heirs before you die.
This involves giving the assets away as gifts before you die. This can help your heirs avoid probate, and it could also be a way to reduce inheritance taxes. However, if the assets are high-value, there might be reporting requirements and taxes on the gifts. Furthermore, you are giving the assets away. That means you no longer have legal ownership or control of the assets in question.
You should regularly review the documents associated with insurance policies. Check the beneficiaries and make sure you have the right names on the documents. Beyond the beneficiaries of insurance policies, you should consider assigning beneficiaries to various accounts you hold.
Many different types of financial accounts can have beneficiaries. You just need to fill out the documents to assign a beneficiary to the account. This could include things like bank accounts and retirement accounts. With a beneficiary assigned the account, ownership will automatically go to that individual upon the death of the account owner.
While there is a lot you can do to keep your estate out of probate, it is a complicated matter. You should consult with an attorney who specializes in estate planning before making any moves to avoid probate. An attorney will be able to tell you which financial choices will be most beneficial to your heirs while also explaining the financial issues that may come with different options.