Proper estate planning includes much more than just deciding how your estate assets will be distributed after your death. What additional components you include in your comprehensive estate plan will depend on your unique needs and goals. One common estate planning goal, however, is probate avoidance. A Vernon Hills probate lawyer explains why you might want your estate to avoid probate and offers some common probate avoidance strategies.
What Is Probate?
When you die, you will leave behind an estate that is made up of all the assets you owned at the time of your death. Probate is the legal process that eventually transfers those assets to the new owners. In addition, probate serves several other important functions, including:
- Authenticating the decedent’s Last Will and Testament
- Litigating any challenges to the Will
- Notifying creditors and allowing them to file claims against the estate
- Ensuring that all taxes owned by the estate are paid
Why Is Probate Avoidance a Popular Estate Planning Goal?
Many people elect to include probate avoidance strategies and tools in their estate plan because probate can be a lengthy and expensive process. Many factors go into determining how low it takes an estate to get through formal probate, including the size and complexity of the assets involved, the state in which the estate is probated, and the skill and abilities of the Executor. It is not unusual, however, for it to take a year or more for an estate to go through formal probate. Probate assets cannot be released to the intended beneficiaries until the end of that process, providing a powerful incentive to avoid probate. In addition, there are a number of fees involved in probating an estate, including those for the Executor, appraisers, accounts, and attorneys. By including probate avoidance strategies in your estate plan you avoid unnecessary expenses, reduce the time your estate spends in probate, and ensure that assets are available for loved ones much faster.
Common Probate Avoidance Strategies
If you decide that avoiding probate should be a goal within your estate plan, there are a number of common strategies you may use to help you reach that goal, including:
- Creating a trust – trust assets do not go through probate. Many people, therefore, choose to create a living trust to hold major assets and use the trust terms to distribute those assets after their death. If you create a revocable living trust, moving assets in and out of the trust is relatively simple and it ensures that those assets won’t be part of the probate of your estate.
- Holding properly jointly – holding property jointly with rights of survivorship is another excellent probate avoidance strategy. When title to property is held that way, upon the death of one owner, his/her interest in the property automatically passes to the remaining owner outside of the probate process.
- Designating accounts as POD or TOD – most financial accounts offer the option for you to designate them as “payable on death (POD) or “transfer on death (TOD).” This allows you to designate a beneficiary who will automatically become the owner of the account assets upon your death without going through probate. Unlike jointly held assets, however, the beneficiary has no rights to the assets while you are alive.
- Qualifying for small estate administration – most states offer an alternative to formal probate for small estates. These small estate alternatives are typically quick and simple. Using other probate avoidance strategies you may be able to reduce your remaining estate assets enough that your estate will qualify for small estate administration.
Ultimately, you will need to sit down and discuss your probate avoidance options with your estate planning attorney to decide which of the many probate avoidance strategies are best to incorporate into your estate plan.
Contact a Vernon Hills Probate Lawyer
For more information, please download out FREE estate planning worksheet. If you have additional questions or concerns regarding probate avoidance, or you are ready to start incorporating probate avoidance strategies into your estate plan, contact an experienced probate lawyer at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.
Latest posts by Dean R. Hedeker (see all)
- Why Do You Need an Irrevocable Living Trust? - January 17, 2019
- Asset Protection Strategies for Small Business Owners - January 15, 2019
- Avoiding Probate in Illinois - January 10, 2019