You’ve probably heard the terms “beneficiary” and “power of attorney” associated with estate planning. But are you familiar with the probate process? Odds are if you haven’t had a first-hand experience with probate, or if this concept has not been introduced in your estate planning conversations, the process might be unfamiliar to you.
Here’s what you need to know:
Probate is the legal process, carried out by the court after a person passes away. The process certifies all debts are paid, assets are distributed according to the individual’s will and if no will is provided, assets are distributed in accordance with state law. The process can be costly and take up to several years to complete.
It can be slow – in some cases, it can take years especially if it’s complicated or involves a contested will
It can be costly- Cost varies from state to state but it usually entails executor fees, attorney costs, and other administrative expenses.
It is public- Since it is a state legal proceeding, what goes on in probate court does not stay there.
Fortunately, there are steps you can take to help your estate avoid the probate process. Working with a financial planner and an attorney, you can implement the following strategies to save your loved ones time and money while establishing your property is transferred to your selected beneficiaries.
1. Create a Trust – A trust allows you to transfer assets to designated trustees, who then distribute the property or monetary value to your selected beneficiaries.
2. Convert your IRA and Personal Accounts to Pay – On- Death Accounts- By indicating your chosen beneficiary via legal documentation; you can directly pass assets in your retirement account(s).
3.Concurrent Ownership – If you own property with another individual, the survivor automatically has rights to the property, and its entirety will be passed to the surviving joint owner at the time of death.
Estate planning benefits those with large estates, as well as those with modest assets. Creating an estate plan ensures that all property will be distributed according to the personal wishes of the deceased and that those who are benefiting from the estate receive the largest distribution possible with a minimum amount of delay. The goal of estate planning is to limit the number of assets that need to go through the probate process and lessen the impact of disadvantages to help you in the long-run.
For more on Estate Planning contact one of our advisors.