When going through the distressing, uncertain, and traumatic experience of mourning a recent death, the last thing anyone wants is to deal with the complications and costs of probate, which can force you to relive the death of your loved one throughout the ordeal.
What exactly is probate? It’s the legal process of handling a deceased individual’s estate, and can involve contesting an invalid will, determining who gets what, or finding an executor if no one was named. Many probate cases take at least nine months to resolve, but it’s not unheard of for cases to take two years or more—usually, the bigger the estate, the longer the process. The process can be expensive, requiring filing, settlement, and attorney fees, and cases can end up costing hundreds of dollars.
While waiting for resolution, heirs can’t take out funds or make modifications to physical assets without getting special permission. When this happens, they can be denied funds needed to pay for funeral costs and medical bills.
In addition to this, these cases are settled in public court and become part of public record, allowing anyone access to information revealing how much money and property your family owns. This can result in crimes such as identity theft. Recent studies have found that the identities of millions of deceased people are used to apply for credit each year. Many identity thieves are able to find the information they need in probate records.
If you are an estate owner, you should have a will. But a will cannot ensure your assets are completely safeguarded from probate. To protect your estate’s privacy while saving your heirs from the expensive and time-consuming probate process, there are several steps you can take to protect your assets in addition to writing a will. Here are some ways make sure your belongings, land, finances, and other assets fall into the hands of your rightful heirs.
Write a living trust. One of the simplest ways of avoiding probate, writing a living trust puts your estate directly under the care of a trustee after your passing. Unlike assets left in a will, assets and property in a trust do not require court approval before being passed to beneficiaries because you have already re-titled and clearly spelled out how your estate should be distributed. Since living trusts don’t have to go through probate court, you spare your heirs costly court fees.
However, there are costs involved in establishing and managing a trust. If your estate is small, it might not justify these fees.
Designate jointly held property. If you appoint a spouse, family member, or loved one as a co-owner with “rights of survivorship” to your property, he or she will automatically become owner after your death without having to go through probate. This strategy is commonly employed by married couples, who designate their homes as jointly held property so they pass directly into the ownership of the surviving member. However, you don’t have to be married to hold property jointly.
Name a beneficiary on your accounts. Most banks and brokerage companies will allow you to name a beneficiary who will receive all the cash in your account after your death. Usually, naming a beneficiary is as simple as contacting your bank and filling out a form. Unlike joint accounts, payable-on-death accounts don’t allow your beneficiary to access to your money during your lifetime. You will have full and sole access to your funds, but when you pass away, the beneficiary can gain access to the funds by going to the bank and showing proper identification. You can name a beneficiary on most life insurance policies, 401K plans, stocks, and pension plans.
Using annuity to fund a Roth IRA is a particularly effective method for passing down substantial sums of money while maintaining privacy. With a Roth IRA, you are able to let your account keep growing—free of income tax—until your passing, when it will transfer to the beneficiary you’ve named. However, the Internal Revenue Service has a set of rules that investors must meet to qualify for a Roth IRA. To be eligible, your income cannot exceed a certain amount.
Give gifts. If you give away assets such as belongings, properties, and money during your lifetime, these assets do not have to go through probate.
To determine the best method for protecting your assets from probate, contact an experienced estate planning attorney with years of experience in asset protection and probate law. A knowledgeable attorney can walk you through these and other protection strategies and help you execute the best plan for your estate. Estate planning can be a complex and emotional process, so it’s vital that you talk to a skilled and compassionate lawyer to make sure you make the right choice when it comes to protecting your privacy, heirs, and assets.
About the Author:
Christopher Q. Wintter is the founder of Wintter & Associates, P.A. and a board-certified expert in Trust and Estate matters by the Florida Bar. With more than 24 years’ experience as a practicing attorney, he also serves as an instructor and faculty member for the National Institute of Trial Advocacy (NITA)—the nation’s leading provider of legal advocacy skills training to practicing attorneys—and has earned the AV® Preeminent™ rating with LexisNexis Martindale Hubbell. He was also selected for inclusion in Florida Super Lawyers for 2011 and 2012 in Estate and Trust Litigation.