As your family and your estate grow, so should your estate plan. Over the course of your life, you will likely add a number of additional goals and objectives to your overall plan. One of the most popular additions to the average estate plan is probate avoidance. To help you decide if probate avoidance tools and strategies should be added to your plan, the probate attorneys at Amen, Gantner & Capriano, Your Estate Matters, LLC explain the most common reasons for avoiding probate.
Understanding the Probate Process
Probate is the legal process that is typically required after the death of an individual. Probate serves several important purposes, including the identification and eventual distribution of the decedent’s estate assets, notification of creditors and payment of estate debts, and the payment of state and/or federal gift and estate taxes due from the estate. Probate also serves to authenticate, or challenge, a Last Will and Testament if one was left by the decedent. If the decedent left behind a valid Last Will and Testament, the individual named as the Executor in that Will is responsible for overseeing the probate process and the terms of the Will are used to determine how the estate assets are distributed. If the decedent died intestate (without a Will), someone typically volunteers to be the Personal Representative and oversee the probate of the estate and the New Jersey (or the state in which the estate is probated) intestate succession laws dictate how estate assets are distributed.
Reasons to Avoid Probate
The reason probate avoidance is such a common estate planning goal is that there are several very good reasons to avoid probate, including:
- Probate takes a long time – probating even a relatively modest estate takes a considerable amount of time. In Missouri, creditors have six months within which to file claims against the estate, meaning it takes at least seven to eight months to probate even a simple estate. Complex estates, or estates that include litigation, can take years to probate. Probate assets remain out of reach of the intended beneficiaries until the end of probate, often leaving loved ones without access to much-needed assets.
- Probate is costly – probate can also be pricey. Everyone involved in the process – lawyers, accountants, appraisers, Executor – is entitled to a fee for his/her services. There are also court costs and other fees and expenses incurred during the probate of an estate. All those costs are paid by the estate, which can significantly diminish the value of the estate that is ultimately passed down to loved ones.
- Probate is public — probate is a very public process. All documents submitted to probate, including the decedent’s Will, become public record once filed with the court. That means that anyone can learn the terms of a Will filed for probate as well as the details of any litigation that occurs during the process.
- A judge may need to approve everything – if the probate requires court supervision, a judge may need to approve just about everything, including the sale of assets, payment of debts and the distribution of assets to beneficiaries. Understandably, many people would prefer not to have a judge interfere with their estate plans.
Tips for Avoiding Probate
There are several estate planning tools and strategies that can help diminish your estate’s exposure to the probate process, or even avoid probate altogether, including:
- Using a Trust Instead of a Will As Your Primary Distribution Method – assets held in a trust bypass the probate process altogether. For this reason, many people choose to use a revocable living trust to hold the majority of their estate assets in conjunction with a Pour Over Will to ensure that any recently purchased or forgotten assets make it into the trust. This allows your estate assets to be distributed immediately after your death according to the trust terms you create.
- Life Insurance – proceeds from a life insurance policy also bypass probate. Life insurance proceeds can be strategically used to achieve a variety of goals within your estate plan.
- Certain Types of Joint Ownership – assets owned jointly with rights of survivorship allow your interest in the asset to pass automatically and directly to the co-owner(s) without the need to pass through probate.
- Payable on Death (POD) or Transfer on Death (TOD) Accounts — when an account is designated as a POD or TOD account, you name a beneficiary who will automatically become the account owner upon your death without going through probate. The primary difference between a POD/TOD account and joint ownership is that the beneficiary of a POD/TOD account has no ownership interest in the account while you are alive.
Contact Probate Attorneys
Please join us for an upcoming FREE seminar. If you have additional questions or concerns about avoiding probate, contact the experienced probate attorneys at Amen, Gantner & Capriano, Your Estate Matters, LLC by calling (314) 966-8077 to schedule an appointment.