The legal transfer of assets after someone dies is called probate. The process verifies the will, disburses the estate and pays off any outstanding debts.
Probate can be a long and arduous process for complicated estates. Court and legal costs can quickly add up. Income taxes are collected on the estate until court procedures have concluded, and personal family information becomes accessible as the court proceedings are open to the public. Many benefactors aim to avoid probate altogether to maintain family privacy and help their loved ones avoid additional costs. Follow these steps so that your beneficiaries can avoid what could be a very difficult process:
1. Plan a lifetime gift
By gifting small amounts of your estate during your lifetime you can not only enjoy the feeling of giving, but help your beneficiaries bypass the taxes of probate. Since large gifts may be subject to gift taxes, try to divide up the gifts in small installments.
2. Establish a living trust
A living trust is an account where you can move your estate and appoint a Trustee to disburse the assets after death. The Trustee can avoid dealing with the courts and this speeds up the disbursement process. Although they help to avoid probate, living trusts can cost up to $3,000 to establish and maintain.
3. Utilize joint ownership
A joint ownership of a home or building allows the property ownership to transfer directly to the surviving partner. This is common for married couples who want to be able to easily transfer home ownership.
4. Know which assets bypass probate
Assets such as property with a value less than $50,000 and retirement funds (if a beneficiary is named) are not subject to probate. Knowing which assets can bypass probate allows the owner to concentrate on the preparation of other assets.
If you need guidance, a trustworthy attorney can help you navigate the estate planning process. By giving gifts, establishing a living trust, participating in joint ownership and managing assets you can avoid probate and ensure that your estate is transferred to your loved ones quickly and easily.