We have spent the past few weeks telling you all about Probate, so we will now answer the question that is likely on your mind…”If the process is so tedious and burdensome, how can I avoid probate?” Today’s blog will share several ingredients for this secret sauce.
A typical question we hear at Hurley Elder Care Law
“My mom just died, and the life insurance company says that my dad (who died in 2015) is the listed beneficiary on the policy, how do I get the life insurance money? “
The only way to get the insurance proceeds in this scenario is to open the estate of the mother either through probating her Will or filing a petition for administration of the estate if there is no Will. However, the probate process could have been avoided simply by remembering to change the beneficiary on the policy when dad died. Such an easy change but often forgotten!
Tips for avoiding probate
There are many planning tools families can take advantage to avoid having to go through the probate process. Most of them are relatively simple. For example, your bank accounts can pass outside of probate simply by putting a POD (paid on death) or TOD (transfer on death) designation on the account. Once you have a POD or TOD on the account the money will go to the designated person(s) upon the presentation of a death certificate to the bank. Each bank has its own procedure for doing this so please check with your bank for their procedure.
Managing your beneficiary designations
Another way to avoid probate is to put a beneficiary designation on any account, which allows it. Obviously, Life Insurance policies require beneficiaries, but did you know that IRA and 401K accounts, brokerage accounts and Annuities can have beneficiary designations? The most important thing to remember is to update your beneficiary designations often. This is especially true for any major life event like a marriage, divorce (wouldn’t want your ex getting your brokerage account!), birth or a death. If the person designated as the beneficiary is deceased, the proceeds go back into the estate and then a probate must be opened for the heirs to receive the funds.
Handling real property
When it comes to real estate the best way to avoid probate is to have the property titled in joint tenancy (with one or more individuals) with right of survivorship. When property is titled in joint tenancy with right of survivorship, the property does not need to go through probate to have the deceased individuals share pass title. The joint owner(s) need only to file an affidavit and the death certificate in the county where the property is located to have the deceased removed from the title. Although many married couples title their property this way, single adults do not realize they can own property with another individual (adult child or friend) as joint tenants with right of survivorship. The only drawback to Joint ownership is that the property is available to the joint owner’s creditors.
What about a trust?
The other option to avoid probate is placing your property, in a Trust. There are many choices when it comes to trusts. It is best to seek the advice of a lawyer who specializes in this area to determine which type is best for your circumstances. A properly drafted trust can protect your property, maximize your estate planning, and pass your property to the next generation according to your specific instructions and without the interference of the probate court.
As you can see, many times paying attention and taking the time to make necessary changes and updates can lead to huge cost and time savings. The experts at Hurley Elder Care Law are happy to discuss your estate plan and help you plan to avoid the need to probate your estate.
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