Probate is a legal process of administering and managing the assets of the decedent. It involves tasks like distribution of assets among the heirs and clearing out pending dues of the decedent. After clearing all the dues with the estate funds, the heirs get the estate’s remaining share. The executor executes all this task on behalf of the decedent.
The executor uses the estate fund to clear out the taxes and fees involved in the probation process. These payments reduce the estate’s value left by the decedent for his/her heirs. This is one of the most significant disadvantages of the probate process. The probation process also puts a lot of stress on the heirs as they have to move to court to attend every hearing. If the decedent assets are in different countries, then it is an addition to the stress they already had.
To avoid the above disadvantages, a person should avoid making a will for his/her assets distribution after he/she dies. They should take different steps to avoid a probate process. Some ideas that can keep an individual’s asset out of probation after he/she dies are:
1. Name Beneficiaries on All Accounts That Goes Under Probate
An individual can do this step without seeking any professional assistant. The individual can name beneficiaries for every asset he/she has before his/her death. Some of the most valued assets offer this feature of naming a beneficiary to that asset. In this case, the assets didn’t get transferred to the beneficiaries through probation.
In certain accounts, the beneficiary’s name gets filled in the Payable on Death (POD) section. Whereas in non- retirement accounts, the beneficiary name gets filled in the Transfer on Death (TOD) section. In both cases, the meaning is the same that is to transfer the assets to the beneficiary after the owner’s death.
Some of the accounts that have the feature of naming a beneficiary are:
- Bank Accounts
- Brokerage Accounts
- Life Insurance Policies
- 401K Plans/ Pension Plans
- IRA Accounts
Naming a person as your beneficiary is a simple process. By filling out one to two forms, you can get finish with this process. After which the beneficiary has the right to obtain the assets after your death. He/she can get the assets without going through the probate process.
2. A Trust to Avoid Probate
The most straightforward way to avoid probation and keep your assets out of probate is trust. A trust instructs how the decedent’s assets will get distributed without involving the court. It is not similar to a will. A will distributes the assets after your death, whereas trust allows you to place assets in it. The trust carrying the assets gets transferred to the beneficiary after your death.
The trustor appoints a trustee who will take all the decisions regarding the beneficiaries after the trustor’s death. There are many advantages in choosing trust over probate, such as:
- In probation, the court keeps all the records and also offers its access to the general public. This violates your privacy, as everyone can see how your assets get distributed. In a trust, there is privacy as the public has no access to the trust’s information.
- Trust is less expensive than probate. This will prevent the reduction of estate value left for the heirs or beneficiaries.
- Trust is a faster process than probate. The heirs wait to get the assets left by the decedent is less in case of trust.
3. Hold Joint Properties
Holding properties jointly is one of the recommended steps to keep your assets out from probate. You can hold the assets jointly with your spouse. In this case, the assets get transferred to your spouse directly without going through a probate process.
The living spouse becomes the sole owner of the assets held jointly with the decedent. This type of transfer saves the spouse from the stress of running to a court. There is no tax and extra fee involved in this process. Hence, protecting the actual value of the estate from getting reduced.
Professional assistants like probate attorneys also suggest holding joint properties. Joint hold properties ensure easy transfer of assets without experiencing any hassle.
The best way to avoid the reduction of estate value and stress is by preventing the transfer of assets through the probate process. Every individual should try to keep his/her assets out of the probate. The steps mentioned above are one of the best ways to do this.