Avoiding Probate

Probate is the legal process of administering the estate of a deceased person by resolving all claims and distributing the deceased person's property under the valid will.  A probate court (surrogate court) decides the validity of a testator's will. A probate interprets the instructions of the deceased, decides the executor as the personal representative of the estate, and adjudicates the interests of heirs and other parties who may have claims against the estate.

A. First determine whether it's worthwhile to avoid probate. "Probate" sounds intimidating and expensive; but avoiding it could be more expensive and cumbersome. Speak with an estate planning professional to find out whether you should reorganize your assets to make avoiding probate easier.

B. Joint tenancy allows two people to have equal ownership over property most commonly over real estate or bank accounts. Upon your death, the remaining person will become the property's sole owner. You must take care to ensure that a joint tenancy is right for your property. In general, joint tenancy is usually best between spouses because of tax issues. Still, you can create a joint tenancy with anyone.

C. If you create a joint tenancy with one child to avoid probate but want to distribute your assets evenly between all your children, you can't do that with joint tenancy, even if you have a will. Additionally, transferring property of any significant value could have tax ramifications (either estate, gift or capital gains) that you must analyze before executing any transfer. Even if your property is owned by a joint tenancy, you still need a will in case your joint tenant dies with you.

D. Contract-controlled assets you want disbursed when you die are probate-exempt. Such contracts include life insurance, retirement accounts, or contractual trust obligations. Because the property passes through a contract and not a will, the probate court isn't involved in disbursing those funds.

E. You can also avoid probate by distributing your assets through a revocable living trust. With it, you create a legal entity that can own property. You avoid probate because the assets are not yours; they belong to the trust. To create a revocable living trust you must name a trustee and a beneficiary. You can name yourself (in most states), a bank or a trust company as the trustee. The beneficiary of the trust is the person you want to receive the assets. After creating the trust, you must fund it. Take care to treat the assets as the trustee's; they're no longer yours, although you may still have unrestricted access to the assets.

F. Perhaps the simplest way to avoid probate is to give away your property while you're alive. As of January, 2007, you can give up to $12,000, in 2011 $13,000 in gifts while avoiding any gift tax on the transfer of property. Side note: If property does not belong to you when you die, it cannot be subject to probate.

How do I begin the probate procedure?

The Executor or personal representative can be appointed and the Will admitted to probate in most cases by going to the Surrogate's Court with the original Will, certified death certificate, and, if the Will is not self-proven, at least one of the witnesses who signed the Will must prove the signature on the Will.

There are many stages in "probate" and not enough room to cover all about probate, even though it might seem scary, it can be a smooth process if advanced preparation has been established for the remaining family in regards to your plan of action .

If you are considering Retirement Planning, call for a free consultation today.