Although it’s always important to review your plans for your estate, it becomes crucial when you reach your sunset years. After all, you likely want to share your estate with your family members, loved ones, and perhaps a cherished charity. And if you’re not careful, a large portion of that money could go to the government to cover probate fees. If you haven’t already spoken to an attorney about your estate plan, we encourage you to take some time to learn how to avoid probate. You won’t regret it!
How to Avoid Probate
What Is Probate?
When putting together your will, you serve as the testator, or the person writing the will. At the time of your death, your will is put into effect and your assets will be distributed to the beneficiaries named in the will. This process is supervised by the courts and is called probate. Not all wills go through probate, however. In a nutshell, probate is the legal course that determines the legality and validity of a will. Each state has its own requirements regarding probate. For this reason, you should consult your lawyer to determine if probate is the best way to secure your estate. In many cases, it’s not. Probate is often an expensive, time-consuming, and stressful process. In addition, probate creates a public record of all the assets and property listed in your will, but many people would prefer to keep this information private.
If your estate is modest and you aren’t concerned about keeping it private, you may not need to bother with learning how to avoid probate. If your estate is quite large and complex, however, you may wish to bypass probate for the sake of your beneficiaries. In avoiding probate, you may save money, save time, and ensure your estate’s privacy.
What Are Some Alternatives to Probate?
One of the most common ways to avoid probate is to use a living trust. You can add to or adjust the trust during your lifetime. The purpose of the trust is to hold your assets and estate while you’re alive. It also lists who will receive those assets in the event of your death.
The AARP is a great resource to learn more about living trusts and how to avoid probate. The organization explains that a trust is created with three parties: you (the creator), the trustees who will manage your estate according to the terms of the trust, and the beneficiaries. While a living trust keeps your estate and its division of assets private, it can often be more complicated and expensive than a will. That’s why it’s important to talk with your family and your financial advisor to find the right fit for your estate.
Just because you’ve established a will, that doesn’t mean your entire estate is required to go through probate. There’s another simple and inexpensive option when considering how to avoid probate. Along with a will, you can name beneficiaries of your assets. You can specify beneficiaries for bank accounts, life insurance policies, IRA accounts, stocks, retirement plans, and 401K plans.
Simply talk with your bank and providers to make sure you have someone (or some charity) listed as the beneficiary for each account.
Don’t let your estate fall into the wrong hands. Talk with your family, your lawyer, and your financial advisor to determine what’s best for your assets.
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