Are you worried about what happens to your property after you pass away? Many fear their loved ones will endure a long and costly probate process. This can be stressful and time-consuming.
Don't worry, though! We've researched this topic deeply and understand what you're going through. One key fact is that designating beneficiaries on your accounts can help them avoid probate. In this article, you'll learn simple ways to ensure your assets transfer smoothly when you're gone.
Keep reading to see how easy it can be!
There is hardly a week that goes by without someone calling to ask for help to "avoid probate." Often, they don't understand the probate process or have no strong reason to avoid it. More about the probate process can be found here. While each person’s estate planning should be discussed with their attorney, there are situations where avoiding probate is very important. Let's look at a few ways New York estate planning attorneys help clients avoid probate. For specific legal advice, talk with an estate planning attorney.
Name a Beneficiary on Your Accounts
Almost all brokerage, retirement, and bank accounts as well as life insurance policies allow you to specify who inherits your accounts when you die. You do this by making your accounts POD (payable-on-death) or TOD (transferable-on-death) to a beneficiary you choose. You select beneficiaries by filling out forms and submitting them to the institution. You can also name alternate beneficiaries in case the primary ones die before you do. After you pass away, your named beneficiary needs to bring ID and proof of death to collect the proceeds; all without a Surrogate’s Court proceeding. If the form isn’t filled out, or if all listed beneficiaries die before you do, a probate or estate administration proceeding will be needed before funds are released.
Own Assets as Joints Tenants With Rights of Survivorship
If you own property with someone else as joint tenants with rights of survivorship (JTWROS), or as tenants by the entirety (TBE), the property automatically passes to the other owner(s) when you die. Many assets like bank accounts, investment accounts, and real property can be held as JTWROS or TBE which avoids probate upon your death. It is crucial that ownership papers such as deeds are properly filled out. Sometimes people assume assets are owned as JTWROS but are actually owned as tenants in common and don't pass automatically upon death.
Create a Revocable Living Trust
A revocable living trust is an agreement that lets you manage your property while alive and allows someone else to manage it when you die which avoids probate. When you create a trust and transfer assets into it, the trustee of the trust (which is initially also you) becomes the legal owner. When one trustee dies, a successor trustee takes over management according to instructions set up by the grantor (you). Although assets in only the decedent's name go through probate, assets in trust don’t since ownership simply changes hands. Revocable trusts also let someone else manage your assets if you're unable.
Make Gifts
Another way of avoiding probate is giving away your assets while still alive. This isn't generally recommended since it leaves you at the mercy of beneficiaries who aren’t required to return gifts. There are also tax and long-term care consequences linked with gifting during life so talking to an estate planning attorney first is important.
Conclusion
You've discovered three essential methods to bypass probate: designating beneficiaries on accounts, co-owning assets, and creating a revocable living trust. Each of these actions is practical and time-saving. Consider how implementing these approaches can enhance your planning. By taking some steps now, you can simplify matters for your loved ones in the future. Begin planning today to ensure peace of mind tomorrow!
FAQs
1. What is probate?
Probate is the legal process where a court reviews a will to ensure it's valid and oversees the distribution of assets.
2. How can I avoid probate?
You can avoid probate by setting up a living trust, naming beneficiaries on accounts, or owning property jointly with rights of survivorship.
3. Why should I want to avoid probate?
Avoiding probate saves time and money... It keeps your affairs private and reduces stress for your family.
4. Can all assets skip probate?
Not all assets can skip probate... Only those placed in trusts, named with beneficiaries, or owned jointly bypass this process.
