This perception follows the widely held belief that estate planning boils down to the execution of a simple will. In this post, we will provide some clarity so you can go forward in an informed manner.
Simple Wills and the Probate Process
A will is in fact admitted to probate after the death of the person that created it (the testator). When the will is being constructed, the testator names an executor to act as the administrator.
During probate, the executor will post a notice to inform creditors about the passing of the decedent. They are given four months to come forward seeking satisfaction. In the meantime, the executor will identify the assets, conduct an inventory, and prepare them for distribution.
No inheritances are distributed during probate, and all things considered, it will usually take at least nine months. There are probate expenses that reduce the value of the estate, and anyone that is interested can access probate records to find out all the details.
Living Trust Administration
The thing that is sometimes missed is the simple fact that you do not have to use a will to facilitate asset transfers after you are gone. Assets that are distributed through the terms of a living trust would not be subject to probate at all.
Another misconception that is often harbored is the idea that trusts are only for wealthy people, and you lose control of assets in a trust. High net worth individuals use irrevocable trusts to address estate taxes and protect assets in different ways, but revocable living trusts are in a different category.
If you create a living trust, you would be able to act as the trustee, and you would have total access to all of the assets in the trust. There are other benefits aside from the probate avoidance, but we will look at them in a different post.
Probate-Free Asset Transfers
In addition to living trust distributions, there are other types of asset transfers that are not subject to probate. People sometimes use them to intentionally avoid probate, and in other instances, it is just a beneficial coincidence.
One of these situations would be property that is held in joint tenancy. A homeowner can add someone else to the title or deed of their property as a joint tenant. When one joint tenant dies, the other person would become the sole owner of the property, and the probate court would not be involved in the transfer.
A payable on death account is a bank or brokerage account that has a beneficiary. If you have one of these accounts, your beneficiary would assume ownership of the resources after your passing. This would be a probate-free transfer.
Life insurance proceeds do not go through probate, and distributions from inherited individual retirement accounts are taken outside of probate.
Attend a Free Webinar
We encourage you to explore all of the written material that we have on this website, but if you want to condense the learning process, you should attend one of our webinars. The sessions couldn’t be more convenient, and they are being offered free of charge.
To see the schedule and obtain registration information, visit our webinar page. When you determine which session you would like to attend, follow the simple instructions to register.
Need Help Now?
If you already know that you would like to consult with an attorney to put an estate plan in place, our doors are open. We can gain understanding of your objectives, make recommendations, and help you develop the ideal plan for you and your family.
You can send us a message through our contact page to request a consultation appointment, and we can be reached by phone at 802-879-7133.