Probate - Tips For Keeping Your Estate and Inheritance Assets Out of Court
Probate is a legal process used to ensure property belonging to an individual who has died is accounted for and properly distributed to beneficiaries.
During probate, assets must be inventoried and creditor claims, tax liens and outstanding debts must be paid in full before property is released to heirs.
Probate laws vary from state to state and are governed by county and state Probate Courts.
Depending on the circumstances and size of the estate, assets can be tied up in probate for six to eighteen months.
Many people believe if they file a Last Will and Testament their estate will be exempt from the probate process; however, this is not the case.
One way to ensure your estate will not be held in probate court is to file a revocable living trust.
When setting up a living trust, legal title to your property is transferred into the trust and administered by a Trustee.
You can designate yourself or someone else as the Trustee.
If you designate another individual as the Trustee, they will not have access to your property until you die.
Using a revocable living trust allows you to specify beneficiaries whom you want to inherit your personal belongings and property.
Assets transferred to the trust are not considered part of your estate and avoid the probate process.
Upon your death, the Trustee can easily distribute assets to designated beneficiaries.
Keep bank accounts out of probate by setting them up as Payable-on-Death.
POD accounts can be setup through the bank by filling out a simple form to designate the person you want to inherit the money in your accounts.
Typically, spousal joint bank accounts automatically transfer to the surviving spouse.
However, to be on the safe side, file a payable-on-death form with the bank to assign your spouse as the beneficiary.
Automobiles, motorcycles, recreational vehicles and watercraft can be kept out of probate by designating a Transfer-on-Death beneficiary.
Similar to the POD bank account, the designated beneficiary will assume ownership of your vehicle in the event of your death.
Transfer-on-death benefits are not available in all states.
Therefore, you will need to inquire with your state's Department of Motor Vehicles or visit their website to determine if TOD is applicable.
A lesser known way to keep your estate out of probate court is to give your belongings away while you are still alive.
Oftentimes, people who have been diagnosed with terminal illness choose this option.
Individuals will sign over the title to their home or car and gift it to their children, spouse, siblings or friends.
When you gift real estate, automobiles and other valuables prior to your death, it reduces the size of your estate.
In many states, estates under $50,000 are not required to undergo the probate process.
If the estate does have to go through probate, reducing the value can lower costs associated with the process.
It's important to note that you can gift property to others at any time in your life.
However, if gifts exceed more than $12,000 to any one individual during a calendar year you are required to file a gift tax return.
Depending on the assessed value of your estate, there may be other options to further protect your assets and avoid probate.
It's best to consult with a professional who specializes in Probate and Inheritance Law.
By setting up a revocable living trust and taking steps to keep your estate out of probate, you will save your loved ones considerable stress and emotional turmoil at the time of your death.
During probate, assets must be inventoried and creditor claims, tax liens and outstanding debts must be paid in full before property is released to heirs.
Probate laws vary from state to state and are governed by county and state Probate Courts.
Depending on the circumstances and size of the estate, assets can be tied up in probate for six to eighteen months.
Many people believe if they file a Last Will and Testament their estate will be exempt from the probate process; however, this is not the case.
One way to ensure your estate will not be held in probate court is to file a revocable living trust.
When setting up a living trust, legal title to your property is transferred into the trust and administered by a Trustee.
You can designate yourself or someone else as the Trustee.
If you designate another individual as the Trustee, they will not have access to your property until you die.
Using a revocable living trust allows you to specify beneficiaries whom you want to inherit your personal belongings and property.
Assets transferred to the trust are not considered part of your estate and avoid the probate process.
Upon your death, the Trustee can easily distribute assets to designated beneficiaries.
Keep bank accounts out of probate by setting them up as Payable-on-Death.
POD accounts can be setup through the bank by filling out a simple form to designate the person you want to inherit the money in your accounts.
Typically, spousal joint bank accounts automatically transfer to the surviving spouse.
However, to be on the safe side, file a payable-on-death form with the bank to assign your spouse as the beneficiary.
Automobiles, motorcycles, recreational vehicles and watercraft can be kept out of probate by designating a Transfer-on-Death beneficiary.
Similar to the POD bank account, the designated beneficiary will assume ownership of your vehicle in the event of your death.
Transfer-on-death benefits are not available in all states.
Therefore, you will need to inquire with your state's Department of Motor Vehicles or visit their website to determine if TOD is applicable.
A lesser known way to keep your estate out of probate court is to give your belongings away while you are still alive.
Oftentimes, people who have been diagnosed with terminal illness choose this option.
Individuals will sign over the title to their home or car and gift it to their children, spouse, siblings or friends.
When you gift real estate, automobiles and other valuables prior to your death, it reduces the size of your estate.
In many states, estates under $50,000 are not required to undergo the probate process.
If the estate does have to go through probate, reducing the value can lower costs associated with the process.
It's important to note that you can gift property to others at any time in your life.
However, if gifts exceed more than $12,000 to any one individual during a calendar year you are required to file a gift tax return.
Depending on the assessed value of your estate, there may be other options to further protect your assets and avoid probate.
It's best to consult with a professional who specializes in Probate and Inheritance Law.
By setting up a revocable living trust and taking steps to keep your estate out of probate, you will save your loved ones considerable stress and emotional turmoil at the time of your death.