Avoiding probate is a common desire by many testators. Therefore, it is important to understand how this could be accomplished and whether taking such measures is in the best interests of the estate plan.
When a person dies, their estate will, in most cases, need to go through the probate process. This is a legal process that involves the court-supervised distribution of assets. Because this process can be expensive and time consuming, many individuals seek to design their estate plan to help loved ones avoid the process altogether.
One common way to minimize the chances that your estate will have to go through the probate process is to set up a trust. If your assets are re-titled to the trust, then these assets will not be subject to probate at your death. Instead, these assets will be divided in the way it was specified in the trust.
If complete avoidance of probate is your goal, then a revocable trust is probably your best choice. By transferring your assets to the trust, you can further protect these assets in the event of incapacitation. If you become incapacitated and unable to handle your own affairs, than a named agent will take over the management of the trust assets and will provide for your care.
In addition to trusts, there are other ways to protect assets and avoid probate. One way is through joint ownership with right to survivorship. In this case, if a co-owner dies, the other automatically inherits the property without going through the probate process. Additionally, retirement accounts and any other account that can have a listed beneficiary can avoid the probate process. At your death, the beneficiary named will receive the contents of the account.
There are many things to consider in the estate planning process. While it is difficult to think about death, it is important to think about what will happen to your assets following your death and how asset distribution could impact loved ones.
Source: Fedweek.com, "Retirement & Financial Planning Report," Jan. 26, 2017