When determining your estate’s future distribution with the protection of assets and minimizing estate taxes as a goal, it’s essential to take time and learn about the features and differences between Revocable and Irrevocable Trusts. Both of these unique estate planning options have specific benefits, disadvantages, and conditions for use that you should be familiar with before choosing to use one as an end of life planning option.
The fundamental similarity between these two types of Trusts is their goal of saving and later distributing your assets after your death by your choosing and direction. These are useful tools that can save on associated taxes later, protecting the financial future of your surviving family members.
What is a Revocable Trust?
If you want a Trust that allows you to make changes or essential updates whenever you want, a Revocable Trust is probably a smart choice. This estate planning option will enable you to maintain control over your assets and estate while still alive. Regular Trusts don’t offer this flexibility, instead acting as the owner for you once funded. Although, once you have passed, your Revocable Trust will become irrevocable and unchangeable.
Key features of Revocable Trusts include:
- Avoids probate
- Ongoing control
- Can assign a Trustee in case of incapacitation
While the above features are quite beneficial, there are disadvantages of a Revocable Trust to remember before creating one:
- Constant updating
- Additional administrative duties
- No protection for assets
- No tax advantages
What is an Irrevocable Trust?
Choosing an Irrevocable Trust is a commitment to very limited opportunities for modifying or terminating the Trust. While not impossible, making any change usually requires approval from all the designated beneficiaries. The limited flexibility of this plan is difficult to navigate without an experienced estate planning attorney’s help, but this Trust has features that make it worthwhile.
- Asset protection
- Minimizes estate taxes
- Government benefit opportunities
- Access to government benefits
Those choosing to use an Irrevocable Trust as part of their estate planning should also be aware of the disadvantages of this option, including:
- High tax on income earned by the Trust
- Expense and hassle of an additional tax return for the Trust
- Difficult legal language and terms that increase possible errors
Speak with an Experienced Estate Planning Attorney About Your Options
When creating a Trust, you have one main goal in mind: protect your estate assets to provide financial security for your family when you pass. As the attorneys at Dana and Associates, LLC, can explain, doing so with a Revocable or Irrevocable Trust could be the best option, but you first need to determine which suits your situation best.
Estate Planning Lawyer
A power of attorney is a document you’ll make which outlines an agent who you want to act on your behalf if you are unable to do certain things. This is often when you are incapacitated due to aging, injury or illness. The agent you choose in your power of attorney is someone who will be expected to place your interests ahead of his or her own. This is why it’s important you choose someone you trust. In a power of attorney, you can give the agent power to make financial decisions, monetary gifts, guardian recommendations and healthcare decisions. The following are four types of power of attorneys.
A general power of attorney allows the agent to do almost anything you would normally do. This includes managing your money, opening new bank accounts, making purchases, transferring money, paying medical bills and anything else similar to these actions. If you become incapacitated, the court terminates the power of attorney arrangement. It would also be terminated if you died or revoked the power yourself.
A durable power of attorney allows an agent to make all the abovementioned decisions even after you become incapacitated. While a general power of attorney may be used while you are fit to make your own decisions and possibly just out of the country, a durable power of attorney extends beyond that to a time in which injury or illness would prohibit your ability to make decisions. Your durable power of attorney agent could make medical decisions if you are in a coma, for example.
There are special circumstances in which someone might appoint a special power of attorney to handle one specific thing. For example, if you are going to be out of the country, but you need to sell your home in the states, you could appoint someone as a special power of attorney, simply to conduct the sale of your home. Once the sale has been finalized, that individual has no more authority over your estate.
Just as it sounds, a springing power of attorney “springs” into action when a certain event occurs in your life. This is often when you are incapacitated and unable to handle your own affairs. Although this may sound similar to a durable power of attorney, it’s different because a durable power of attorney is in effect from the time the document is signed. A springing power of attorney is not in effect until the event specified occurs.
Getting Your Affairs In Order
You never know when something unexpected will happen, which is why it’s important to get your affairs in order as soon as possible. Contact an estate planning lawyer, such as from Citadel Law Firm, to get started today.Read More
Dementia is a sinister ailment that comes with age. It leaves us bereft of our reason and awareness. Unfortunately, we have very little idea of who and when we may fall victim to this condition before it happens. If we wait too long, it can preclude the ability to prepare, resulting in severe legal and financial consequences.
Testamentary Capacity Is Required to Execute Estate Planning Documents
Dementia impacts many elements of legal planning. For example, signing a will – can a person with dementia sign a will? The law requires that the person signing a will must have “testamentary capacity” in order for the will to be valid. This means that the person signing must have the ability to make consistent reasoned decisions about their person and property and basically understand what he or she is signing. If capacity comes and goes as is often the case with dementia patients, a moment of clarity can be enough to establish capacity. If the signer understands the nature and consequences of their act at the specific time they are signing their estate planning documents, the person has capacity.
Some general criteria for capacity would be the ability to:
- Remember who relatives are, and to articulate who should inherit their property
- Understand the nature and extent of their property
- Understand the document of a will, and how it distributes property
- Understand how all of these things are related; i.e. that the purpose of the will and its role in distributing property to family members
Anyone with an interest in an estate can contest a will if they believe the signer lacked the mental capacity to sign and understand it. Although there is a general presumption of capacity under law, it is important for the attorney to ensure that the person signing the will is competent. For a person with diminished capacity who has a moment of clarity at the time of signing, the attorney may consider having the signing videotaped, or have witnesses speak to the competency of the signer at the time of execution in order to evidence or defend the validity of the will.
A Good Power of Attorney Can Help Family Members Make Decisions
It’s important to have a good, durable power of attorney to help plan for all eventualities and enable family members to make important decisions on behalf of someone who lacks capacity. A power of attorney that grants only limited powers may not be sufficient to protect the individual’s interests and could result in a lengthy court battle to make important decisions for the benefit of an elder with dementia.
One example of how a deficient power of attorney can impact a family is the case of a child who may be prohibited from pursuing Medicaid planning on behalf of a parent because a power of attorney lacks certain powers. If the power of attorney does not authorize the child to make donations, establish trusts, engage in self-serving transactions, or other necessary steps to qualify a parent for Medicaid, the financial consequences could be devastating.
For these reasons, it is critical to pursue proper legal planning for a family member who has dementia – before it’s too late, and important decisions regarding care are left to the whims of the court system.
An Experienced Estate Planning Attorney Is Key
Even the best power of attorney may not be capable of solving every problem, so it’s important to consult a knowledgeable estate planning attorney who can help you navigate these situations, and prevent deficient documents from interfering with the care or legacy of a family member who has dementia.
Thanks to our friends from Theus Law Offices for their insight into estate planning.Read More
What is a beneficiary designation? It is a form you fill out that says who will receive some benefit when you die. Even though that should be a serious consideration, most people do not give it any thought when they sign it. Why? Because you complete a beneficiary designation form at stages in your life when you are not thinking about your estate plan. Think about it. Where are you when you are signing a beneficiary designation? In an insurance agent’s office, at a financial advisor’s office, in a bank, at the employee-benefits office of your job. There is never an estate planning attorney anywhere in sight.
At one stage, you may be starting out in life. Perhaps you started a new job. Or maybe your business just grew to the point where you started a retirement plan. Or maybe you just had your first child. You sign the papers without much thought, so you can get back to the exciting and interesting things in your life.
Years later, you have changed jobs. Or maybe you sold your business, and converted that 401(k) to a regular IRA, or a retirement annuity. Again, papers are put in front of you, without much consideration, you sign them, and move on. This time, maybe you have a niggling doubt in your mind. Why? Because you put your spouse as primary beneficiary and then your kids next. That gives you pause because your spouse has never managed money in his or her life. And your kids are very young. Surely you should think about this. You console yourself that when you have time you will give more consideration to the choices made on that beneficiary designation form.
Next, you have a kid or two going to college. Or a kid getting married. Or maybe, you are approaching retirement. You sign some more papers, again, perhaps considering or not considering the consequences. But telling yourself that you are definitely going to set aside some time to give your estate plan serious consideration.
I’ll share an anecdote to underscore the point. Once there was a man who started out a new job in his twenties. He had just married. He stayed at that job for twenty-five years, vesting in all kinds of retirement and death benefits. It was good job. But some time in between the start of that job, and the third year, he had divorced. Now, twenty-two years later, he had two young children with another partner. And then he died. Guess who got all of his death benefits from the job? The first wife. Why? Because of the beneficiary designation he signed when he started the job.
In the life of your family’s finances, most people do not realize how momentous a simple thing like a beneficiary designation can be. In a sense that form is a plan. By saying who gets this money, you are planning for the future. But it is a future when you are not there to help the people you care about. But is a beneficiary designation a good plan? Even if you are content that you have designated the right persons, should you feel like you have an estate plan?
The thing to know is this: a beneficiary designation is a straight shot to your beneficiary. Using a beneficiary designation as an estate plan is like trying to hit a target with a rifle. But the target is attached to something across the street – a car, or a tree. And the rifle is on a timer. That rifle is going to go off any time between now, and twenty to forty years from now. What is the chance that rifle is going to hit the target? Not very good. And that is the same thing with a beneficiary designation as an estate plan. It is not likely to hit the target. The target in this case, is your estate planning goals.
In estate planning it is often the simplest of things that can be the most impactful. One of the most well understood documents that is completely misunderstood, in my experience, is the beneficiary designation. Why? Because a beneficiary designation is not an estate plan. A plan has contingency instructions in it. A plan defines people for their role in your life, and not necessarily by their name. A plan provides protections for the people you care about, based on the vulnerabilities that you know they have. None of that can be accomplished with a beneficiary designation. And yet, that beneficiary designation may be directing the immediate payout of a huge percentage of the net worth of your estate.
Before you complete a beneficiary designation, you should have an estate plan. That means setting goals, and getting advice on how to achieve them.
Thanks to our friends from Penbay Estate Planning Law Center for their insight into beneficiary designations.
Planning one’s estate is one thing, but discussing it with family members is often something else. It can be awkward, depressing, and sometimes met with hostility by those who do not want to ponder the possibility of losing a loved one. It’s why many people do not plan their estate—they do not want to ruffle feathers. And often it’s the individuals themselves who do not want to face the fact of their mortality and that everyone dies eventually. These are unfortunate scenarios because when an estate plan is not in place, after a loved one’s passing there may be many questions, leaving loved ones to only wonder what the decedent’s final wishes may have been. It can also place the estate in jeopardy of having to undergo probate, a process that can be avoidable, but without a will or trust is often required. The resulting probate will cost the heirs time and money.
Family Discussions and Estate Planning
It’s a common scenario: neither the parents nor their adult children wish to discuss end-of-life and post-life preferences of the parents. Many choose to postpone these conversations until or unless a life-threatening health condition arises. But, sometimes this is too late. The important issues that need to be discussed may include any or all of the following:
- What the parents desire for their remains (whether it should be a burial or cremation or even where they should be laid to rest).
- Retirement finances: covering their cost of living, the ability to pay taxes, and who will inherit the retirement funds.
- Elderly care whether it’s at home partial or full-time care, retirement or nursing facility residency, etc. Alternately, should one or more children assume care for the elder should they be unable to care for themselves.
- Who will inherit which assets and in what percentage. For example, will the ownership of the family home be equally shared among the children, will all the children inherit equal amounts of cash funds?
Counseling as a Possible Solution
Everyone is different. People communicate in different ways and their emotional triggers vary from one person to the next. Difficult or awkward topics can often be bridged when the conversation participants use certain verbal and body language cues to help develop a safe environment. These tools can be taught by a trained and licensed counselor. It may also be helpful to hold conversations about estate planning and related issues in a counseling office because of its neutral setting. If the elders or the children do not wish to participate in the discussions in a counseling arrangement, one or both can still benefit from gaining insight from a therapist in how to lovingly approach these conversations with the other family members.
Reach Out for Help
If you would like to formalize your final wishes in order they will be legally binding, contact an estate planning lawyer. If you would like help in learning ways to approach family members to discuss estate planning issues, consider reaching out to a licensed therapist.Read More
Different Kinds of Trusts
You might have heard about irrevocable and revocable trusts or special needs trust, but did you know there are more than 30 different kinds of trusts? Many of these are complex and applicable to very specific situations. With any trust you will need a trust lawyer, but when it comes to these rarer types of trusts, it is essential to choose an experienced trust lawyer, like a trust lawyer.
Rare Types of Trusts
There are many types of trusts. Some of the rarer forms include:
Credit Shelter Trust – A credit shelter trust is also known as a “family trust” or a “bypass trust.” You will need to draft a will that bequests an amount to the trust up to, but not more than, the estate tax exemption. From here, the remainder of your estate can be passed to your spouse tax free. One of the biggest benefits to this trust is that as soon as the money is placed into a bypass trust, it becomes free from estate taxes.
Generation Skipping Trust – Also known as a dynasty trust, it allows you to transfer a very large amount of money into the trust, and still be free from taxes. In general, this trust must be for at least two generations your junior (i.e. at least your grandchildren).
Qualified Personal Residence Trust – This trust can remove the value of your home or another property from your estate. These trusts are most beneficial when you have property that will likely appreciate in value.
Irrevocable Life Insurance Trust – As a trust lawyer might tell you, this trust is ideal when you have life insurance and would like to remove it from your taxable estate, pay estate taxes, or provide your beneficiaries with money for various reasons. In order to do this, you will need to remove your policy from the estate. Your ownership rights to the policy will need to be surrendered, and you can no longer change it or borrow against it. In return, the proceeds can pay off any estate costs after your death. It also provides your heirs with tax-free income.
Gun Trust – A gun trust is ideal for anyone who has a gun collection with Class 3 weapons and select other destructive devices. The trust enables property to be transferred to and from the trust, and for both beneficiaries and trustees to be named.
Irrevocable Life Insurance Trust
These trusts are integral to estate plans with large amounts of wealth. At this time, the federal government gives individuals a $2 million tax exemption. Any portion of an estate beyond that amount is taxed as high as 45 percent. Estates worth more than 2 million can benefit from having life insurance as an estate planning tool. As an estate planning lawyer might tell you, there are flexible approaches to exclude life insurance proceeds from the estate of the surviving spouse and that of the first spouse to pass away. These are complicated trusts and should be handled by an experienced trust lawyer.
The Bottom Line About Trusts
Estate planning is complicated and demands professional oversight by a knowledgeable estate planning lawyer. If you would like to learn more about your estate planning options, and what trust may be right for you, please call a lawyer today.
Protecting your financial future from medical bills that result from a serious illness or injury can help you prevent bankruptcy and other catastrophic debt. While surgery, physical therapy, and other medical costs can skyrocket out of control quickly, establishing a living trust before they occur may help you protect your savings and other assets.
Consider Your Medical Risks
Before you can set up a living trust to protect your finances, it is important that you consider your risk connected with the likelihood that you will incur large medical bills. To do so, you can review several different factors that may include:
- Pre-existing medical conditions
- Your current health/recent medical procedures
- Your risk for stroke or heart attack
If you are unsure about your current medical status, you may want to have a complete medical checkup and ask your doctor to check for any issues that could cause your health to decline over time, such as type II diabetes.
Review Your Current Assets
Before you hire a lawyer to help you draft a living trust, you may want to gather and review your assets so you understand what your belongings are worth. Include cash, checking and savings accounts, cars, and real estate. You may want to keep in mind that vehicles and real estate may depreciate in value over time, so occasional adjustments of the total worth may be necessary.
Create an Irrevocable Trust
You may be able to protect your assets with more certainty if you create an irrevocable trust. Unlike a revocable trust, this type of document cannot be changed or amended in any way once it is set up. This can help guard the contents of the trust from creditors, including hospitals and other medical facilities. This can be especially helpful if you want to protect assets for your children or grandchildren and ensure the money is there for the future, even if you do incur significant medical costs due to a sudden illness or disability.
Speak to an Attorney
While it is possible to set up a living trust on your own, doing so with the assistance of an attorney can give you peace of mind that the documents are valid and correct. An estate planning lawyer may also be able to advise you about how to organize your assets, how much to add to the trust, and what kind of taxes you may have to pay on it.
A trust can protect your assets from medical expenses, especially when an illness or accident causes catastrophic debt. Contact a lawyer today for additional information and assistance.Read More
Most people have heard of a will, although few people fully understand what a will is used for. If you are planning your estate, this is something essential for you to know. You may have heard that there are alternatives to a will, and this is true. However, it is recommended that everyone has a will and the alternatives are in addition to it, rather than instead of it. Learn what a will is and what it does.
What a Will Does
A will is a legal document that describes what your wishes are for after your death. Its primary functions are:
- Distributing your possessions – The most famous and essential function of your will is to determine who will receive your possessions. You can divide your estate up and choose who will receive each individual item. There are only a few limitations on how you distribute your possessions.
- Naming an executor – Your will needs to have an executor. This is someone who will ensure your wishes are carried out correctly. You can name the executor of your will in the will itself. If you do not name an executor, the courts will assign one instead, which will lengthen the probate process.
- Naming a guardian for your children – If you have children who are still minors, you need to designate who will become their guardian. You should also designate who would become the guardian in the event that both you and your spouse die at the same time.
Many people do not realize that a will does more than simply designate who receives their estate. These other legal matters make it important to have one.
What a Will Does Not Do
It is important to know what your will cannot do. The biggest misconception is that a will can provide funeral instructions. A will cannot do this, although it can bring attention to a separate document that outlines your funeral instructions. This will ensure that your executor knows about it.
A will also cannot set conditions on your possessions. For example, if you wanted to leave your granddaughter college tuition, but only until she has finished college, your will would not be able to do that. You may want to consider setting up a trust instead, which can place any number and kind of conditions on your possessions that you desire.
The first step in setting up your will is speaking with a will lawyer. A legal professional will be able to help you with every step in the process.Read More
Estate Planning Lawyer
If property goes to probate, then a judge determines how assets are distributed among your beneficiaries. Probate judges are experienced with this, but that doesn’t guarantee that they will make the right choices. Someone who appears to be the proper heir “on paper” may not be the person you would like to inherit your estate. Some considerations involved in the process include:
- Time: The probate process takes time. Mid-sized estates may take as many as two years to process in probate. If the judge’s decision is contested, it can take even more time. A small, uncontested estate may go through probate in just 18 months. However, if there are disputes, cases can take as much as ten years to complete. As the probate process drags out, legal fees stack up.
- Money: The probate process costs money. All the legal costs and those for the executors and attorneys eat into the estate. The heirs will be distributed what’s left.
- Privacy: Privacy is not guaranteed with probate. Both the assets and family information can become public record. As disputes heat up, family arguments and secrets could be revealed.
Alternatives to Probate
If you want to avoid the pitfalls mentioned above, there are alternatives to probate. Options that can ensure your heirs are not subject to the probate process include:
Revocable living trust: A revocable living trust holds the property via a trustee, so it is not counted toward the probate of the estate. Federal estate taxes must still be paid. However, the estate will transfer to the chosen heir(s) quickly. To create a revocable living trust, the estate owner must create a trust document and select the beneficiaries that they want to inherit the trust.
Joint ownership of property: If another person is listed on the title of the property, then it goes to that other person automatically after death.
Pay-on-death accounts: Retirement and bank accounts can be designated pay-on-death accounts by filling out a single form. The form lists the beneficiary the estate owner wants to have the funds. These automatically transfer to the beneficiary upon death.
Living trust: A living trust is similar to a will. It distributes your assets upon death but skips the probate process. Assets are placed in a trust managed by a trustee.
Joint tenancy with right of survivorship: Joint ownership of property keeps the real estate out of probate. Anyone’s name can be added to the title. The estate will pass to the survivor.
If the state you live in allows it, tenancy by the entirety enables married couples to skip probate. The property may also be designated as a community property with a right of survivorship.
A Will is not Enough
Don’t assume that a will is sufficient to keep your estate out of probate. An attorney can help you create a concise estate plan that works around the probate process. Contact a lawyer for more information.Read More
Small Business Lawyer Rolling Meadows, IL
As a small business owner, it’s important that you create a plan for the future to ensure that your loved ones are aware of your wishes when the time comes. Although the creation of a will and estate plan is often something that many may put off for another day, it is essential for a number of reasons:
- Clearly outlines your wishes so that loved ones are not left guessing
- Ensures that your business is able to thrive for years to come
- Mitigates the risk of familial conflict over your final wishes
- Gives you the power to choose how your assets should be distributed
- May reduce taxes on your assets
- Prevents your assets from ending up in the wrong hands
There are a number of reasons to stop putting off your will, especially if you own a business. Taking action by putting a plan together can provide you with not only peace of mind, but a clear plan that your family can refer to in the event you become incapacitated or pass away. Working with a lawyer who has experience in developing wills and business planning may be in your best interest so that nothing is left up for discussion.
What is Business Succession?
No matter how large or small your business is, developing a plan of business succession is key. A business succession plan requires that you make a number of both financial and logistical decisions regarding your business. You will start by identifying the party who will be taking over your business. Following this, you will need to consult with a lawyer for help in putting your wishes into a document and developing your estate plan. This is because the sale of a business can be expensive when you consider the tax implications. You will want to make sure that you are able to smoothly transition ownership of your business in the best way possible. Options for succession that business owners may choose include:
- Leaving your business to an heir or someone in your family
- Selling to your business partner
- Allowing an employee to purchase the business
- Selling your business to an outside entity
Business succession is not just for your passing, it plans for your retirement so that you are able to smoothly transition away from your business. Beginning this process years ahead of time can ensure that you are able to move away from your business when you are ready to retire.
Making Sure That Nothing Is Left Out
There is much to consider when creating your will, especially when incorporating your business into the document. Because of this, you may be concerned that you will forget to include some key element to your plan. Working with an estate planning lawyer can be beneficial for a number of reasons, including:
- To help develop buy-sell agreements
- Outline a clear plan for who will run the business
- To consider tax implications that may arise for those who stand to inherit the business
- Help to avoid probate
- To protect your assets
- Prevent family from selling interests to those outside of the family
There are a number of benefits, many, you may have not considered. Don’t forget to incorporate your business into your final wishes, contact a small business lawyer in Rolling Meadows, IL from Bott & Associates, Ltd. today so that nothing is left out.Read More
Wills and Trusts Law Firm
When you die without a will, it’s called being intestate. Typically, if you don’t have a will, the estate will be adjudicated through probate court. A judge will appoint an executor to handle the details of your estate and present information to the court. Here are some of the pitfalls of not having a will.
You Don’t Decide Who Takes Care of Your Children
If you have minor children, on your death, the other parent will take care of your kids. If you are single and the other parent isn’t in the picture, then the court may appoint someone to take care of your children. Ideally, this person is family, but depending on the dynamics in your family, it might not be the best person or the one you would trust. To avoid this issue, name a guardian of your children in your will.
Your Assets Go to Your Heirs as Decided by State Laws
Without a will, your assets are distributed according to intestacy laws in the state where the property is located. Generally speaking, your spouse is your beneficiary, but it can be more complicated than that. If you have children with another person, your estate could be divided between your current spouse and your children. If you aren’t married, the state has laws that outline who inherits. First, it would look for children. Next, your living parents would be identified as beneficiaries, then siblings or nieces and nephews. If no relatives are found, the estate would probably go to the state.
If you are living with an unmarried partner, you might assume that your property would go to that person. Probate courts look for relatives who are married to you or related by blood. An unmarried partner would not qualify. This could leave your partner in the lurch. If you have a painting that you want to give to a friend, it wouldn’t happen. Avoid complications by naming beneficiaries in your will.
Your Assets Could Be Tied Up in Probate Court For a Long Time
If your relatives argue over who is your beneficiary, the real beneficiaries may never see any of your assets while the court tries to find a resolution. Probate court fees and expenses could take a chunk out of your estate. Your estate will have to go through probate if you have a will, but the court will have your wishes, making it easier to settle the estate. You can also name an executor to oversee your wishes.
Talk to a wills and trusts law firm in Ridgefield, CT today about a valid will to give you peace of mind when you die.
Thanks to Sweeney Legal, LLC for their insight into estate planning and what happens when you die without a will.Read More
Estate Planning Lawyer in Palatine, IL
You may have watched a scene depicted on a television show or in a movie that takes place after a funeral. People all gather at a reception in someone’s home, and the executor of the estate calls certain people into a study or extra room. There is a “reading of the will” at that time, and the implication is that the executor will be able to distribute assets to the inheritors after they are informed about the intentions of the deceased individual.
In reality, things do not work in this fashion. If you pass away with a last will in place, the executor or personal representative would be required to admit the will to probate. The administrator that you choose would take care of the hands-on tasks, and the court would provide supervision during the probate process.
Probate is in place for a couple of different reasons, but it is not necessarily a positive thing for people that are in line for inheritances.
One of the major drawbacks of probate from an inheritor’s perspective is the time factor. Even if there are no major complications, it will usually take nine months to a year for probate to run its course. No inheritances can be distributed during this process, and that can be a long time to wait.
There are also a number of different expenses that accumulate. These would include a filing fee, legal expenses, liquidation and appraisal charges, the executor’s remuneration, and other incidentals. All of the money that is spent during probate is essentially coming out of the pockets of the people that are named in the last will.
Privacy is lost during probate as well. It is a public proceeding, so anyone that is interested can access probate records to find out how you distributed your assets if you use a will. This can be disconcerting in a general sense, but this knowledge can potentially cause hard feelings among interested parties.
There are some asset transfer methods that are not subject to probate. In some cases, people will intentionally use these “easy answers” to avoid probate, and in others, it happens organically. However, unless you make informed decisions with the help of an estate planning attorney, negative consequences can come about.
With the above in mind, property that is held in joint tenancy can be transferred free of probate. So, if you were to add a joint tenant to the title or deed to your home, that individual would inherit the property after your passing, and the probate court would not be involved.
However, there are some potential problems with joint tenancy. When you add a joint tenant, this individual would own half of the property immediately. Therefore, if the person was to become the target of a lawsuit, the portion of the property that is owned by the joint tenant would be in play. The co-owner would also have to be cooperative in order for you to be able to sell the property.
Payable on death accounts can be opened at banks and some brokerages. If you start a payable on death or transfer on death account, you add a beneficiary. After your passing, this individual would assume ownership of assets that remain in the account, and the probate process would not be a factor.
This may sound like a simple solution, but there are limitations involved if you take this course of action. You could add multiple beneficiaries, but you would have to allow for equal distribution of the assets. This may not be consistent with your wishes, and what about the rest of your property?
An estate planning lawyer in Palatine, IL would say that the best way to avoid probate is to establish a revocable living trust. After you create and fund the trust, you can serve as the beneficiary and the trustee while you are living. In the document, you name successors to assume these roles after you pass away. When the time comes, the successor trustee would be empowered to distribute assets to the beneficiaries in accordance with your wishes outside of probate.
Contact Bott & Associates for their insight into estate planning and administration.Read More