Probate costs several percent of GROSS estate assets.
Probate takes many months to settle, and can strangle your business in the meantime.
Probabte records are public. Everyone will know what you gave away and to whom. This is a boon for fortune hunters.
Method: Jointly owned assets have a survivorship feature, meaning that upon the death of the first joint owner to die, the asset transfers automatically, by operation of law, to the surviving owner. In other words, jointly owned assets avoid probate, but only on the first death.
Downside: This method does not help the surviving spouse. It merely kicks the can down the road.
Method: Gifting assets during your lifetime avoids probate. If you don't own it, it's not in your estate.
Downside: Gifting assets also means losing control of them and placing them at risk in case the beneficiary has their own credit event. This amounts to giving your assets away, hoping the beneficiary does the right thing and that no unexpected events occur.
Method: Life insurance and retirement assets avoid probate if you have a designated beneficiary. This means that you name an individual as your beneficiary, not your estate. Life insurance and retirement assets are ruled by contract law.
Downside: Unlike a trust, if you change your mind, then you must change every account a beneficiary is or is not on. A trust allows you to change one document, instead of multiple accounts.
Method: Any assets that you own with a transfer on death (TOD) or payment on death (POD) designation also avoid probate. They transfer by contract to the named beneficiary.
Downside: You must change the title on every asset whenever you change your mind. We once had a client who forgot certain assets, and the result was a previous wife receiving assets which were not intended for her.
Method: A fully funded revocable living trus is the most popular method for avoiding probate. This is the simplest way to avoid probate because there is no down side except upfront paper work, This means that all of your assets are titled in the name of your trust and you only need to change one document when changes are needed.
Downside: The downsides of an RLT have nothing to do with probate. The issues are leaving outright inheritances to heirs, not minizing taxes and not providing asset protection for yourself or your heirs.
Method: An asset protecton trust removes property from your name, and thus removes it from the probate estate.
Downside: An irrevocable trust is initially more expensive than
If you don't like the idea of having your beneficiaries' contact information along with what they received published bby the courts for the pubblic to see, then you'll want to avoid probate.
Like to save money and time...and make things easier for your loved ones? Then, you'll likely want to avoid probate.
What if you own property in one or more other states when you pass away? Without planning, your out-of-state property may be subject to a process known as Ancillary Probate. Under Ancillary Probate, property that's located out-of-state may need to go through the probate process in the state where it's located before it can be passed on. This presents two potential complications for your loved ones at the time of your death.
Time and Expense
One or more additional probate processes means additional court costs and attorney's fees, not to mention the amount of time that your out-of-state property may be tied up and inaccessible by your family members. Plus, your loved ones might need to travel back and forth to facilitate the Ancillary Probate process, which will likely only add to the expense and stress already associated with settling a probate estate.
Multiple Sets of Heirs
If you pass away without a Will, then you'll have what's called an "intestate estate." This means that the laws of each state where you have probate property will determine who inherits that property. And intestacy laws can vary from state to state. The result? You could end up with different sets of heirs for different items of property, depending on where that property is located.