Probate versus probate avoidance
Probate, simply put, is the way that a person’s estate – their stuff – passes to their heirs.
If the person who died left a valid Will, a probate court accepts the Will. The executor then has the authority to go about the business of settling the estate. The court doesn’t have to do much, because the Will and other estate plan documents tell the executor what to do.
The probate court is even more involved if the person who died did not leave a valid Will. The probate court will appoint an administrator to settle the estate. Without the guidance of a Will, however, the administration of the estate may be frustrating, time-consuming, and costly.
Fortunately, we have estate planning tools that help people avoid probate.
Revocable Living Trust. A revocable living trust can help you avoid guardianship and probate, while protecting the assets for your spouse or children. If you become disabled, a successor trustee named in the trust takes over management of the trust assets. Upon your death, the assets pass as stated in the trust document. In other words, they could go straight to your beneficiaries or into another trust.
Joint Tenancy & Tenancy by the Entirety. One way to quickly transfer assets to an heir without the need for probate is by making the heir a joint owner or “joint tenant with right of survivorship.” This method of avoiding probate does have some pitfalls. For example, the assets may be vulnerable to your co-owner’s creditors. Additionally, there can be significant tax consequences if you transfer or change title to assets during your lifetime. Using the right trust avoids these tax consequences.
Beneficiary Designations. You can add Transfer on Death (TOD) or Pay on Death (POD) beneficiary designations to your financial accounts. Upon your death, the funds in those account are passed to the beneficiaries immediately. No probate court action needed!
Let Us Help You.
Strategic estate planning can help your heirs avoid a lengthy probate proceeding. At Adams & Miller, P.C., we thoughtfully evaluate our client’s needs, then craft estate plans that include the best options. Call us at 256-237-3339 or use our Contact Form [link] to let us know you’re ready to develop your estate plan.