Probate can be defined as the legal process of estate administration. In the state of New York, the Surrogate’s Court has jurisdiction over estate cases. If you were to use a last will to express your final wishes with regard to the way that you want your assets distributed, you would name an executor in the document. After your passing, the will would be admitted to probate. The executor would handle the estate administration tasks, and the court would provide supervision.
Sometimes, a person will pass away without any estate planning documents at all. This is called the condition of intestacy. Under these circumstances, interested parties would approach the court to supervise the administration of the intestate estate. A personal representative would be appointed to act as the administrator. After final debts are paid, the assets would be distributed in accordance with the intestate rules of succession in the state of New York.
We should point out the fact that there are drawbacks that go along with the probate process. You should understand them before you decide to use a last will as the centerpiece of your estate plan. One of them is the fact that the process is time-consuming, and your heirs would not receive their inheritances until the estate was probated and closed by the court. It will typically take about nine months at minimum if there are no complications.
There are expenses that accumulate during probate as well, including the executor’s remuneration, court costs, attorney fees, liquidation and appraisal expenses, and incidentals. A loss of privacy is another drawback, because anyone that is interested can obtain probate records to find out how the decedent distributed his or her assets. Probate also opens a window of opportunity for disgruntled parties that may want to contest the validity of the will.
Probate-Free Asset Transfers
All asset transfers that take place after someone passes away are not subject to the probate process. If you have life insurance, the beneficiary that is named in the policy would receive the benefits outside of probate. There is another positive that goes along with the receipt of life insurance proceeds. Generally speaking, they do not have to be claimed as income on your tax returns.
It is possible to name a beneficiary when you open up a bank account. This is called a payable on death or transfer on death account. This beneficiary would not have direct access to the funds while you are still alive. When you have this type of account in place, the beneficiary would assume ownership of assets that remain in the account after your passing. It should be noted that you can add multiple beneficiaries if you choose to do so. This transfer would not be subject to the probate process.
If you own real property, you could add a co-owner to the title or deed. This is called joint tenancy with right of survivorship. After you pass away, the surviving joint tenant would assume ownership of the property in question, and probate would not be a factor.
While this may sound like a simple and effective estate planning solution, there are couple reasons why you may want to take pause before you go this route. The person that you name as joint tenant would become a co-owner right away. As a result, if this individual was to face a judgment or a lien, his or her portion of the property could be attached. You would also have to seek the cooperation of the joint tenant if you decide that you would like to sell the property.
A revocable living trust is a very useful estate planning tool that can be the ideal alternative to a last will. You do not lose control of assets that you convey into the trust, because it is in fact revocable, and you can act as the trustee and beneficiary while you are alive. In the trust declaration, you name a successor trustee and successor beneficiaries. After you pass away, the trustee would be able to distribute assets to the beneficiaries outside of the probate process.
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