Probate, a dirty word in estate planning, is the process where a court determines the legitimacy of your will and then decides how to properly distribute your assets based on that determination. This process can last from six months up to a year or even more and can cost up to tens of thousands of dollars in attorney and court fees. Fortunately, there are legal tools in place, non-probate transfers, to minimize the possibility of an estate needing to be probated.
Benefits of Non-Probate Transfers/Avoiding Probate
One of the benefits of using non-probate transfers for property assets is that the owner has control over them and can decide the manner in which they will be distributed upon his death. By utilizing a trust, the grantor may designate whomever they please as the account beneficiary and this person will inherit said property. Making sure that your assets are non-probatable will also save your loved ones a significant amount of time and money. As mentioned prior, the probate process can be a lengthy and costly procedure, and by utilizing non-probate transfers to account for your estate, your beneficiaries may be able to avoid paying certain taxes and legal fees, as well as not spend their time in and out of court. Lastly, another reason to avoid probate is that the probate process is open to public record. By going through non-probate transfers instead, the transfer of your estate will receive will be kept private and away from the public eye.
The Different Types of Non-Probate Transfers
In estate planning, there are various ways that an estate can pass through non-probate transfers. A common way is leaving property to beneficiaries through a living trust. Trusts do not require probate, unlike wills, and are used specifically for passing on property and other valuable assets according to the grantor’s wishes. Another common non-probate transfer is leaving funds to a beneficiary through a pay-on-death account, also known as a transfer-on-death account. A transfer-on-death account (TOD) allows the grantor to transfer stocks and other securities directly to their beneficiaries. Grantors may also leave funds to a beneficiary through a life insurance policy, IRA, 401K, or other retirement accounts. Another example is to have the grantor hold property as joint tenants with someone else; upon a tenant’s death, the surviving tenant will immediately own the entire interest in the property without having to go through probate. A grantor may also gift their assets before they pass so that the assets are not apart of the estate.
Seeking Legal Help
Using non-probate transfers can be a great way to bypass probate, and have your estate distributed according to your wishes. If you or a loved one are looking to draft an estate plan, we highly recommend that you consult a licensed estate attorney, who will guide you through the rough waters of setting up your non-probate transfers and making sure your assets are properly accounted for in your estate plan.