The bad news: When a deceased person’s estate (all of their money and assets) has to go through probate (the court-supervised process of distributing a deceased person’s money and assets), it can be subject to a variety of costs stemming from attorneys, executors, appraisers, accountants, courts, and state law. Depending on the probate’s complexity, fees can run into tens of thousands of dollars.
The good news: Many of these costs can be reduced by avoiding probate. It’s really that simple.
Here are three simple ways to reduce or eliminate costs by avoiding probate:
The probate process only applies to those accounts or other assets that are in your name at your death. By naming a beneficiary, these accounts and other assets will be transferred to the named individual without any court involvement. Common beneficiary designation assets include:
- Life insurance
- Retirement plans
Caution: When someone is named as a beneficiary of an account or asset through the use of a beneficiary designation, he or she will receive that account or asset outright, which could subject the account or asset to claims asserted by the beneficiary’s creditors.
2. Own Property Jointly.
Probate can also be avoided if the asset you own is held jointly with a right of survivorship. Similar to a beneficiary designation, joint ownership with right of survivorship has the effect of automatically transferring the ownership upon your death. There are several ways that you can establish this form of joint ownership, such as:
- Joint tenancy with right of survivorship – ownership simply transfers to other tenants upon your death;
- Tenancy by its entirety – a form of joint tenancy with a right of survivorship, for married couples in Michigan and some other states;
- Community property – property obtained during a marriage in some states;
State laws play an important role here. We can help you determine which form of joint ownership, if any, is a good fit for you.
Caution: Just as with a beneficiary designation, adding a joint owner to your accounts or assets can subject the accounts or assets to claims asserted by the new joint owner’s creditors. In addition, this vulnerability begins the moment they are added. This means that your accounts or property could be seized by your new joint owner’s creditors even while you are still alive.
Once the RLT has been created, and you have properly transferred the ownership of your accounts and property to the RLT by re-titling them into the name of the trust, you remain in charge of all legal decisions until your death as the trustee, and you retain the enjoyment of those accounts and property as the current beneficiary. After your death, your named successor trustee will manage and distribute your assets – according to your wishes. A trust works well if it is properly created and funded by an experienced estate planning attorney.
We Have the Tools to Help You
Contact our office today to schedule your appointment. As an added convenience for our clients, we are available to hold our meetings through video conferencing or by phone if you prefer. We are here to help you decide whether it makes sense to avoid probate in your particular case and, if so, the best way to do so.