There are a number of different approaches to estate planning, and though some proceed with a will that will have to pass through probate many people decide that they would like to construct their plan with probate avoidance in mind. Probate is the legal process of estate administration that takes place under the auspices of the probate or surrogate court. Probate proceedings are a matter of public record and if anyone wanted to challenge your wishes or bring claims against the estate they would do so during the probate process. Many people prefer to keep these doors closed and this is one of the reasons why probate is often avoided.
In addition to the privacy issues and the possibility of a contested will probate is costly and it takes a good bit of time for the process to run its course. There are various fees involved, which include court costs, attorney fees, accountant and executor fees, appraiser costs, and liquidation expenses, and these costs can consume a significant percentage of the overall value of your estate. As for time, a complicated estate can take in excess of a year or even multiple years to close, and your loved ones will not receive their inheritances until the estate has indeed been closed by the court.
The are a number of different component actions that one can take to develop a comprehensive probate avoidance strategy and one of these is the use of pay on death or transfer on death accounts. Most banks offer you the ability to name a beneficiary on an account who would assume ownership of any funds that remain in it after your death. In fact, some brokerages provide a transfer on death option as well. So you could use POD and TOD accounts to transfer cash and securities to an heir or heirs outside of the probate process in a very simple, direct, fast and efficient manner.
Often times the simplest solution is the best one, and pay on death accounts are exceedingly straightforward but highly effective all the same.
- How Will You Age in Place and Be Able to Die at Home? - August 16, 2020
- Beneficiary Designations and Other Non-Probate Transfers - August 15, 2020
- Leaving Assets Can Be Tricky – Part 3 - August 13, 2020