How to Spare Your Heirs From the Probate Process
It’s not something we like to think about, but we all pass away at some point, leaving our heirs to settle our final affairs. As you plan for the end of your life, you will probably find that one of your biggest fears is leaving a complicated mess for your heirs. If you die before consulting with an estate planning attorney and implementing a plan, your entire estate will likely be subject to the probate process.
Probate court is often a long, complicated, expensive, and exhausting process that most people would prefer to avoid. You would probably also prefer to make important decisions about your assets yourself, rather than leaving it up to a judge to decide.
One option is to establish a revocable living trust, in which your designated trustee controls the assets you place into the trust. Upon your death, the trustee simply transfers ownership of the money or property to the family, friends, or charity which you specified in the trust documents. Anything you place into the trust is not considered a part of your estate with regard to the probate process, although it will be counted toward federal estate taxes, if applicable.
Another option is to convert your bank accounts and retirement accounts to pay-on-death accounts. You simply need to fill out forms which designate a beneficiary, who just has to provide the financial institution with a copy of your death certificate in order to take ownership of the funds. If you decide to take this route, make sure to seek professional advice before choosing your beneficiary. In many cases it makes sense to designate more than one person, because if something happens to that person before you die, your estate could become more complicated than ever. Also, remember that you must fill out a beneficiary form for each account that you own, and you should review and update them on a regular basis.
In some cases, you may have additional options for avoiding probate while providing a secure future for your heirs. Some people choose to utilize joint ownerships or survivorships in order to transfer certain property, or they give gifts while they’re still alive. Since the laws governing some of these more creative strategies can be complicated, consult with an experienced estate planning attorney before attempting to avoid probate this way.