“Probate” is the term given to the process by which a will is dealt with in a court of law. During the time a will is in probate, an individual is named as the executor of the estate. This means that they are tasked with the responsibility to administer the estate which includes distributing the assets to those named in the will or to the heirs.
Assets will enter probate if:
- They are to be distributed according to a will.
- There is no will or alternative form of ownership.
Assets that are not subject to probate are:
- Any properties that were jointly owned.
- Life insurance that has specifically named beneficiaries.
- Assets that are belonging to an established living trust.
What Is the Importance of Probate?
Many people like to avoid having their will subject to probate for several reasons.
- Because probate cases are of public record, anyone who would like access to the financial records of the family will have that access as they will be able to review any court records.
- The probate process often involves an attorney which can be an unexpected expense.
- The cost of probate itself can be high, as much as 5% of the estate’s value. This price will vary based on the complexity of the case.
- The probate process can be lengthy.
- During the time the will is in probate, no heirs will have access to any assets that they inherited.
- The probate process often takes more than six months to complete.
Estate Planning to Avoid Probate
The process of estate planning is complex, and not one we want to think about. There comes a time, however, when we all need to work through end of life planning. A Peoria IL probate attorney may be able to help in planning for this type of occasion. Ensuring that you have adequately planned your estate not only provides you with a sense of relief but also eases the strain on your family when they are left to handle your estate.
It is possible to work ahead of time to reduce the portion of an estate that will be subject to probate. A few ways to do this are:
- If you have real estate, consider a joint ownership with the person who you will give it to after you pass. The full title can then be transferred directly to that person, thereby avoiding probate.
- Name beneficiaries for retirement plans and IRAs to keep these assets out of probate.
- Create a “revocable living trust.” This is a trust you create while you are still alive. It is revocable and you can amend it as needed.
The Advantages of a Revocable Living Trust
There are many reasons for why such a trust is a popular choice for estate planning.
The trust clearly designates individuals and clearly describes how any assets are to be distributed and handled.
- Your assets are put into the trust which you will be in charge of. You will be responsible for reporting any income of the trust on your yearly individual tax return.
- Upon your death, the assets contained in the trust will be distributed as you have previously dictated.
- A living trust works very similarly to how a will works, with the important difference that a trust is not subject to probate.
The goal of avoiding probate is just one of the many complex issues that can make estate planning a complicated process. However, ensuring that your estate is properly managed and cared for can be simplified with the assistance of an estate planning professional. Enlisting the aid of a professional is especially important if your estate is complex, or large.
Thanks to our friends and contributors from Smith & Weer, P.C. for their insight into Probate Law.