Though death is inevitable and can greet us unexpectedly, there are certain measures one can take to prepare for our own death or the death of loved ones.
Death is one of the few things that many people are quite uncomfortable talking about. Due to this, it can be a difficult act to prepare for your own death or the death of a loved one. Nevertheless, to ensure things are easier on the ones we love after we pass away, estate planning is necessary. One of the most helpful things you can do for the ones you love after you pass away is preventing your assets from going into probate.
The Probate Process
A legal process in which a person’s assets are distributed amongst their heirs and family members is called probate. If a person has written a will, it is this document that outlines which people receive which assets. For instance, if you own a valuable diamond ring, you may pass that along to your daughter or a special family member. Another example would be if you owned an antique or classic car, and you want your son to receive that. These examples show when probate is a necessary action.
On the contrary, there are some instances where you may avoid probate completely. We discuss three of them here.
Create a Living Trust.
If it is your goal to assign specific assets to specific individuals, but you also would like to avoid probate, it is highly advisable to create a living trust, which is basically an alternative to writing a will. A designated trustee will oversee whatever assets are placed in the trust, and once you pass away, the designated heir to your trust receives a distribution from your trustee.
Joint Tenancy with Rights of Survivorship.
If you decide to own your property with another person as joint ownership, this is another way to avoid probate. Once you pass away, joint tenancy ownership will automatically transfer the property to the other owner. It is not a requirement to be married in order to hold this type of ownership with someone. There are some types of joint tenancy that will not actually transfer your interest to the joint owner automatically, so it is crucial that you speak with an estate planning lawyer about your options. If the incorrect type of ownership is taken, it is possible that your portion of the property would be in probate to make a transfer of ownership after your death.
Another option that may ensure you avoid probate is to name beneficiaries for your important assets such as bank accounts and other insurance policies, such as life insurance. WHen you complete these, upon your death, these assets will be payable to the beneficiaries you name. Many people avoid this process, or simply do not take the time set it up, however it is quite simple and easy. Some examples of accounts that are payable upon death are 401K retirement plans, stocks, bonds, IRA accounts, and pension plans. If a beneficiary is not designated for these asset accounts, they will all be probated. To set up a beneficiary for your asset accounts, you can request a payable upon death form from your brokerage or bank.
To discuss other ways to avoid probate and to seek more information, it is highly advisable and recommended that you speak with a trusted and experienced estate planning attorney such as the Estate Planning Attorney locals have trusted for years!