Many people have been told that it is important for people to “avoid probate.” But just because people may have heard that term, doesn’t mean they know exactly what probate means, why it can be a problem or how to successfully avoid it. In this post, we will take a look at the term probate to understand exactly what it means, and what the process includes.
The term probate most literally means “to prove” a will. Today it covers the entire legal process necessary to settle a person’s estate after they die. The appointed representative (usually a family member) opens the probate case in court. With the court’s help, they will work through all of the financial business that the decedent left behind. For example, probate includes disposing of personal property, money, real property or anything else that the deceased owned at the time of their death. Probate also deals with any debts that were in existence at the time of death.
Probate is not inherently evil. It is simply a system that was created to oversee the way estates are handled. However, there is some truth when people say that probate should be avoided, if possible. Some of these cons are listed below.
Creating a smart estate plan is the best way to avoid probate. You and your attorney can work together to draft the proper legal documents and carefully time asset transfers.
The revocable living trust is an instrument which dictates the management or distribution of property. The property is transferred in title to the trust during the owner’s lifetime. The property owner also chooses someone to act as trustee, an appointed fiduciary who will manage the trust property and any distributions after the death of the trust’s creator.
The other good thing about a trust is that there is no need to involve the court in any way. There is nothing to file and it does not need to be submitted to the probate court.
Another way to avoid probate hassles is by placing your assets into joint ownership with your future beneficiaries. This way, when you pass away, the ownership interest will automatically transfer to the joint owner.
Payments on death accounts (POD) have a designation which names a person who will receive the assets in the account when the original account owner dies. At the same time, transfer on death (TOD) is a designation on the title or deed to a piece of real estate or a car which will automatically change ownership once the owner dies.
Some people assume that the easiest way to avoid probate is to give everything away before you die. However, doing this could cause problems for seniors when they may need to qualify for assistance for long-term care.
Hopefully, these tips will help you and your family plan responsibly for the future. Contact a qualified estate planning and elder law attorney today.