The bad news: When a deceased person's estate (all of their money and property) has to go through probate (the court-supervised process of distributing a deceased person's assets), it can be subject to a variety of costs stemming from attorneys, executors, appraisers, accountants, courts, and state law. Depending on the complexity of the probate matter, fees can easily be in the thousands of dollars and may actually run into tens of thousands of dollars!
The good news: Many of these costs can be reduced by avoiding probate. It's really that simple.
Here are three simple ways to reduce or eliminate the probate costs:
- Name a Beneficiary. The probate process only applies to those accounts or other property that are solely in the decedent's name at death. By naming a beneficiary, these accounts and other property will be transferred to the named individual immediately upon your death without any court involvement. Depending on your state, common beneficiary designation assets include: life insurance, annuities, and retirement plans. Caution: When someone is named as a beneficiary of an account or other asset, he or she will receive that asset outright, which could subject the account or asset to the claims asserted by the beneficiary's creditors.
- Own Property Jointly. Probate can also be avoided if the property you own is held jointly with a right of survivorship. Similarly to a beneficiary designation, joint ownership has the effect of automatically transferring the ownership upon your death. State laws play an important role here. We can help you determine which form of joint ownership, if any, is a good fit for you. Caution: Just as with a beneficiary designation, adding a joint owner to your accounts or property can subject the accounts or property to claims asserted by the new joint owner's creditors. Moreover, this vulnerability begins the moment they are added. This means that your accounts or property could be seized by your new joint owner's creditors even while you are still alive. There are several ways that you can establish joint ownership of property, such as:
- Joint tenancy with right of survivorship – ownership simply transfers to other tenants upon your death;
- Tenancy by its entirety – a form of joint tenancy with a right of survivorship, but only for married couples in some states;
- Community property – property obtained during a marriage in some states.
- Create and Fund a Revocable Living Trust (RLT). Once the RLT has been created, and you have properly transferred the ownership of your accounts and property to the RLT by re-titling those assets into the name of the trust, you remain in charge of all legal decisions until your death as the trustee. And you retain the enjoyment of those accounts and property as the current beneficiary. After your death, your named successor trustee will manage and distribute your assets – according to your wishes as stated in the RLT. A trust works really well if it is properly created and funded by an experienced estate planning attorney.
We Have the Tools to Help You
Contact our office today to schedule your appointment. As an added convenience for our clients, we are available to hold our meetings through video conferencing or by phone if you prefer. We are here to help you decide whether it makes sense to avoid probate in your particular case and, if so, the best way to do so.