Carissa Giebel column: Probate and How to Avoid it
11:00 PM, Mar. 26, 2012 |
For most, probate is undesirable. Probate is the court process of paying off any creditors after death, paying any taxes owed, paying court fees, and probably paying attorney and accountant fees, and then eventually distributing whatever is left to the beneficiaries named in the last will.
If there is no last will, the court distributes the assets according to the default in the state law.
Many try to do estate planning to avoid putting their family or loved ones through the probate process. Not only can probate be costly, but it can take months, even years, before the assets are completely distributed to the beneficiaries.
Probate also is a public process, so the deceased's assets and all the named beneficiaries become public record. Most are bothered by this and prefer keeping their financial affairs private, even after they leave this life.
There are ways to set up an estate plan to avoid probate. One way is to set up a trust plan.
Whether you have a revocable trust plan or an irrevocable trust plan, there are ways to set up the trust to avoid probate. However, just because you have a trust doesn't mean your family will avoid probate.
The trust has to be set up properly and all your assets have to be properly funded to your trust. That means that your assets have to be in your trust, or set up so they will be paid to your trust upon passing.
Any assets not in your trust will likely have to go through probate.
Probate also can be avoided by setting up the beneficiary designations on certain assets in such a way to avoid probate.
When people think of assets that have beneficiary designations, they tend to be reminded of their life insurance policies or their retirement accounts. There are many assets that can be set up in such a way to name beneficiaries to avoid probate.
Ever wonder about real estate?
If you own real estate titled in your name, the real estate likely will have to go through probate at your death, unless a certain type of deed is done to avoid probate.
If you own real estate with your spouse, and it's titled in both of your names, it likely will go through probate after the survivor's death.
Real estate can avoid probate by being funded to a trust or by having a certain type of deed drafted to name who you would like to receive the real estate after your passing.
As often as planning is done to avoid probate, for some, probate is desirable.
For example, some younger couples with minor children don't want to set up revocable trust, yet they do not want their children to have full access to their inheritance at a young age. They may want the court to oversee the assets left to the children.
Estate planning is still necessary, but the planning is done to anticipate probate to oversee the assets.
For others, they just like the oversight of the probate court. Probate is not necessarily a bad thing, but for most, planning is desired to avoid the extra cost and hassle for their loved ones.
When setting up your estate plan, no matter how big or small your estate is, it's important to consult with a professional to make sure your goals and wishes are provided for, especially if you're looking to avoid a probate for your loved ones.