You’ve heard it’s a good idea to avoid probate, but do you really know why? Most people have the false sense of security that since they have a Will all of their affairs are in order and won’t involve a court after they pass away?
Not true! A Last Will and Testament are only effective if it is administered through the probate court. Probate takes a great deal of time and money. The process could take a year or more and can create added stress to your heirs.
Avoiding Probate doesn’t have to be difficult. There are simple and effective ways to ensure that all of your property passes directly to your heirs.
Create a Trust
You can put someone “in charge” of your assets upon death to distribute to members of your family, friends, and/or charities based on your wishes. A Revocable Living Trust is created when the person or persons creating the trust are the sole beneficiary during their lifetime and reserve the right to revoke it or make changes. The person creating the Trust usually chooses to also serve as their own Trustee and remain in charge while they are competent.
Any assets properly held in the trust or transferred upon death to the trust will avoid probate and pass to the named beneficiaries as set out in the terms of the trust.
Transfer on Death (POD/TOD)
Transfers of assets can be set up to take effect only at the death of the owner and operate outside of any Will or Trust created by that person. One way is to own an asset with another person so that when one of the owners dies, the property goes to the other joint-owner – no probate involved. However, you do not have to jointly own an asset for it to transfer to another person after death. Naming beneficiaries on CDs, life insurance, and investment accounts will properly transfer those assets to the persons you have named. Other examples include Beneficiary Deed (for real estate), Payable On Death (added to bank accounts), and Transfer on Death (DMV uses to transfer vehicle titles). The biggest downside to using transfers on death for probate avoidance is that if the person you name dies before you do, your assets will no longer avoid probate.
At 417 Business & Elder Law, we can help you understand the difference between a Will and a Trust and how to properly title assets to assist you in planning for your specific needs. We will work with you and help you achieve peace of mind knowing how to structure your assets and avoid probate.
This article was also published in the printed version of the Volume 1 Fall 2015 Newsletter (PDF).
Please call our office at (417) 887-4170 if you have any questions about this article or would like to receive our mailed newsletter.