Probate is necessary to validate a deceased person’s will in court, ensure their debts are paid, and distribute the estate’s property to rightful heirs. However, it can be a long and expensive process.
Luckily, there are several ways to avoid probate. The key is careful planning during your lifetime.
Wills and Trusts
Most people know that a will allows you to give your money and property to loved ones after your death. However, only some understand how much a choice can help you avoid probate.
During the probate process, all assets in an estate must be valued, inventoried, and approved for distribution by the court before beneficiaries can receive them. This can take time and cost money, particularly for valuable items such as real estate, antiques, or collectibles.
By contrast, trusts allow you to move your assets into a legal structure that manages them for you and then distributes them directly to your beneficiaries after your death. There are several kinds of trusts, but the most common type is called a living or revocable trust. Trusts can also be used to protect your privacy by avoiding public records of your estate and asset distribution. Many people combine a will with one or more trusts to accomplish their estate planning goals. This combination is often referred to as a hybrid trust.
Property refers to both a system of rights and the things themselves that are legally regarded as property. Depending on the particular society, the property can include requests to consume, alter, redefine, share, rent, mortgage, sell, transfer, or otherwise dispose of resources.
During probate, the deceased’s assets must be inventoried, outstanding debts paid, and remaining property distributed according to their will or, in the absence of a choice, state laws on intestate succession. This procedure may be difficult, costly, and time-consuming.
One of the most significant expenses during probate is attorney’s fees. These are typically charged hourly and can add up quickly, especially if multiple attorneys are involved. There are ways to mitigate these costs by setting up a revocable living trust before you die. Sometimes, this may even allow your estate to qualify for a simplified probate procedure. This can save your family a lot of money in the long run. Ultimately, you must ensure avoiding the probate process entirely whenever possible. For more information on how to do so, contact an experienced attorney.
As part of the probate process, creditors must pay any debts the estate owes before the remaining assets can be distributed to heirs. They are, unfortunately, figuring out who is owed what can take time and effort. Creditors are only allowed a limited window to file their claims, and the estate executor must work diligently to identify and contact them. This can involve reviewing financial records and even placing a notice in the local newspaper to find unknown creditors.
Some creditors may be able to file a claim against inherited property as well. However, inheritors can only be liable for up to the value they inherited from the estate (mortgages, secured loans, and perfected liens are exceptions).
With careful planning, you can avoid creditor’s claims altogether. One of the easiest ways to do this is by setting up pay-on-death (POD) beneficiaries on financial accounts. This will allow the money from those accounts to go directly to the designated beneficiary, bypassing probate completely. This is a simple and free way to protect your estate from unnecessary expenses.
It’s no secret that probate can be a time-consuming process. The court is tasked with resolving debts and distributing assets, which takes months or even years. It’s also a public process, meaning anyone can access the legal records.
In addition to the lengthy wait, probate can be expensive. One of the most significant expenses is attorney’s fees. These are typically charged hourly, and they can quickly add up.
Another significant expense is property taxes. This is a common reason why many seek to avoid probate by placing assets into trust. This can have various benefits for families, but it’s essential to consult with an estate planning professional to understand the impact on your particular financial and family situation.
One way to avoid probate costs is to use joint ownership with rights of survivorship (JTWROS). If one owner passes away, the title will immediately pass to the survivor, bypassing the probate process. However, this complex strategy has numerous tax implications and should be discussed with a legal or financial advisor.
Regarding estate issues, few are more complex than heirs battling over inheritance. This issue can be avoided through careful estate planning with the assistance of an experienced attorney.
Everything they own (collectively called the “estate”) is subject to probate when someone dies. This includes titled assets like real estate and vehicles, investment accounts, bank or brokerage accounts, and personal items like jewelry or family heirlooms. During the probate process, these individual-owned assets are collected and distributed to estate beneficiaries as designated in a will or by default (intestate heirs) if there is no will.
Heirs, however, are different from beneficiaries in that they are in line to inherit based on state law rather than the deceased individual’s wishes. The heirs may have differing views on what should happen with the land or other property, resulting in expensive legal battles and lost inheritances. These heirs’ property factsheets provide insight into specific state laws addressing this issue and recommend the next steps for affected families.