If you are considering estate planning for your assets and mentioned it to a few people, then you have probably been advised to avoid probate. Well, first you need to understand what probate it -- it is simply the process of distributing your assets to your heirs and settling your debts post your demise.
Why You Should Avoid Probate
It Takes a Lot of Time
You need to avoid probate if you want your heirs to take charge of your property as soon as possible after your death. After all, you wanted them to have the assets, and that is why you bequeathed them in the first place. Moreover, the executor may not be all that experienced and skilled in taking care of all the different types of properties you own.
A typical probate can take three to six months, but it's not unheard of for probate to take years. Things like taxation issues, the sale of assets, and debt management can seriously delay the probate process. The best way to avoid such complications is to avoid probate altogether.
As if the issue of the lengthy duration is not enough, you may also wish to avoid probate once you understand just how expensive it is. The cost of the probate may be a "modest" 3% of your estate, but it can also go as high as 7%. Don't forget that your assets have to be appraised, there may be court fees, you have to pay the attorney, and you may also pay the executor (especially if they aren't entitled to anything in the estate). All these things cost money, but you can avoid most of them if you avoid probate.
How to Avoid Probate
Considering all the above issues, it makes sense that many people are interested in avoiding probate. If you are one of those people, then here are some of the options you can use to avoid probate:
This is an arrangement where you create a legal document that places a person (trustee) to manage a property for your benefit as long as you are alive. If you die, the assets in your living trust are transferred to your beneficiaries.
In this case, you name your beneficiaries as joint owners of the assets you wish to leave for them after your death. That way the assets go to the surviving owners if you die before them.
Payable-on-Death Accounts and Registration
A payable-on-death account is an account that transfers your money automatically to a named beneficiary if you die. A payable-on-death registration does the same thing for assets (such as motor vehicles).
For more information, contact a law office like Abom & Kutulakis LLP.