Ensuring your family’s financial security is important to you. Therefore, you created a will that will pass on your wealth when you die.
But if you haven’t structured your estate plan to avoid probate, they could be waiting months before receiving any of your assets. Furthermore, they won’t even be receiving the full amount.
Why avoid probate?
When someone passes away, their estate may go through probate. This is a court-supervised process of validating the will, ensuring debts are paid and the remaining assets are transferred to the heirs and beneficiaries.
Probate can last anywhere from several months to more than a year, depending on the complexity of the estate and if there are disputes. During this time, attorney’s fees, court costs and other expenses can significantly reduce the estate’s value and what your heirs receive.
Probate is also part of the public record, which means that your financial details are accessible. Fortunately, with proper planning, you can often avoid probate entirely and protect your family’s time, finances and privacy.
Trusts are one of the most flexible estate planning tools available. A revocable trust allows you to place assets under the management of a trustee. The assets can be used for your benefit during your lifetime. Upon your death, they can be transferred directly to your beneficiaries without going through probate.
Real estate, bank accounts and retirement investments can be passed directly to named beneficiaries with transfer-on-death deeds and accounts. Real estate can also be held jointly with right of survivorship. When one owner dies, the property passes directly to the surviving owner.
Life insurance policies and retirement accounts, such as 401(k)s, typically let you name beneficiaries, and are one of the simplest ways to avoid probate.
A well-drafted estate plan implements the right strategies for avoiding probate, thus protecting your family from unnecessary delays and stress. Discuss your goals with a legal representative to create a plan that is right for your situation and meets your goals.
