You should work with a licensed estate planning attorney to help you prepare your plan for a number of different reasons. One of them is the simple fact that there are many different ways to go about it, and the right choice will depend upon the circumstances.
If you are not aware of all the options that exist and the reasons why one asset transfer method may be preferable to another under, you can make mistakes. While you will not be around to see the outcome, your loved ones will be forced to deal with the consequences.
In an effort to shed some light, we will look at a number of the different ways that asset transfers can be facilitated in this post.
We will start with the most commonly used asset transfer device in the field of estate planning.
Everyone is aware of the fact that you can use a last will to state your final wishes with regard to the transfer of your monetary assets. In the document, you name an executor, and this individual or entity would act as the administrator.
It can seem as though a last will would allow for a very simple estate administration process, but this is a misconception. A will must be admitted to probate, and the court would determine the validity of the will and provide supervision going forward.
Probate is time-consuming, it is expensive, and it is a public proceeding that strips you and your family of privacy. For these reasons, people often take steps to get assets into the hands of their loved ones outside of probate.
Payable on Death Accounts
When you open up an account at a bank or brokerage, you can name a beneficiary. This person would not have access to the funds while you are living, but they would assume ownership of the assets after you are gone. The transfer would take place outside of probate, and this a major benefit, but there are drawbacks and limitations.
Property Held in Joint Tenancy
If you own a home, you can add a co-owner to the title or deed. This is called the condition of joint tenancy, and it comes with right of survivorship. Should you go this route, the surviving joint tenant would assume total ownership of the property after the passing of one joint tenant.
This is another type of probate-free asset transfer, but you have to understand the fact that the joint tenant would own half of the property as soon as you add them to the ownership document. As a result, that portion of the property would be exposed if the joint tenant was to run into legal or tax problems.
Revocable Living Trusts
Many people would say that the best way to arrange for asset transfers outside of probate is through the creation of a revocable living trust. As the name would indicate, you don’t have to worry about losing control, because you can revoke the trust at any time if you choose to do so.
You can act as the trustee and the beneficiary while you are alive, so you never surrender access to the property in the trust. The successor trustee that you name in the trust declaration would be able to distribute assets to the successor beneficiaries after your death, and probate would not be a factor.
There are irrevocable trusts that can be used to transfer assets, but probate avoidance would not be the primary reason to use one. People use these trusts to protect assets from the estate tax, and they are used for special needs planning purposes. These are a couple of the functions, but there are others, and we will examine them in detail in a future post.
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If you would like to discuss your unique estate planning objectives with a licensed attorney, our doors are open. You can send us a message to request a consultation appointment, and we can be reached by phone at 802-879-7133 in Vermont and 518-389-6020 in Albany, New York.