Your family may want to do everything in your power to keep an estate out of probate, given the potential difficulties and delays the process can introduce to the distribution of assets. Probate can be an expense and hassle, and it may be the last thing that your family wants to deal with when you are in a time of transition.
Thankfully, there are estate planning steps you can take ahead of time to potentially avoid the probate process for some or all of your assets. Speaking to an estate planning attorney ahead of time allows you to learn more about your options and what you might do to help your family and save them time and money when you are no longer here.
If your loved one has passed away, and you find that you need to go through the probate process, you should seek legal help from an experienced probate attorney. A probate lawyer can handle all the details of this complicated process, and they can address any challenges that arise. The hope is that you can avoid both delays and litigation.
The last thing you want is for your family to be alone and uncertain during a difficult time. You can be proactive in easing their burden by investing time and money in an estate planning attorney.
Why Your Family Wants to Avoid the Probate Process
Probate is the name for the court process that eventually leads to an estate being closed and the assets being transferred or retitled in the name of the beneficiaries. There are many steps in the probate process that happen over months or even years. Probate is not a quick process, and many things are squarely outside of your control.
Probate can be a highly complicated and technical process. Your family must handle a lot of paperwork as part of the court process and as your case makes its way through the system. If you make a mistake on any of this paperwork, it can even prolong your case even more. Probate judges do not accept incorrect paperwork, and there is no allowance for mistakes from people who do not have a probate lawyer.
Many unwelcome surprises might happen during the probate process. The deceased person’s creditors have the opportunity to come forward and seek payment for the debts they are owed. Probate is their final chance to be paid since the estate will be closed afterward. You may be surprised by an unexpected creditor your family knew nothing about.
Will contests are one of the major difficulties during the probate process. An interested party dissatisfied with the will might take steps to challenge its validity. They can make any of the following arguments:
- The testator was under the undue influence of someone else when they made the will
- The testator did not have the mental capacity to make a will
- The will was induced by fraud
- The will was made under duress or fraud
- The will otherwise did not meet legal requirements, such as it not being properly witnessed
Will contests can be nasty and expensive. They can tear a family apart and add significant time to the probate process. When there is an estate in which many people may have a large financial interest, you are more at risk of a family member objecting to the will. Always have a probate lawyer to address these issues.
Plan Ahead to Avoid Probate
You do not have unlimited time to make an estate plan, allowing you to avoid probate for your family to the fullest extent possible. It is certainly too late after death. Even before that point, there may be a point where you can no longer make changes to your estate plan due to incapacitation.
Remember, you must have the mental and legal capacity to sign a valid and binding document. When you get to the point when your physical and mental health begins to decline, it can be too late to formalize any estate plan, and you will either be stuck with no plan at all or the one that you already have in place.
Any document you sign without the proper capacity is vulnerable to a challenge if there is any will contest. If one family member felt that the terms in the new documents treated them unfairly, there is a definite chance of a contest occurring. Thus, you need to exercise foresight, even when times are better because you never know when it will be too late to do anything about your estate plan.
Maximize Assets in Transfer on Death Accounts
Probate only applies to certain categories of assets where the title needs to be transferred. An entire category of assets can stay out of probate entirely, even if they are not placed in a trust.
Numerous types of accounts operate on a transfer on death basis. The account holder must specify the beneficiaries ahead of time and the percentage of the account they should receive. When the beneficiaries provide proof of death to the institution holding the account, the assets will be transferred to them in accordance with their shares.
Transfer on death accounts can include:
- Bank accounts
- Brokerage accounts
- Retirement accounts
- Proceeds from a life insurance policy
If you have assets in a transfer on death account, it is crucial that you periodically check who you have designated as beneficiaries and make changes as necessary. The instructions you attach to the account will be implemented no matter how your circumstances have changed, so it is up to you to ensure the designations are still current.
For example, most people update their account beneficiaries to their spouses on getting married. However, in the chaos of a divorce, they might forget to update their beneficiaries on life insurance or retirement accounts. Then, the proceeds might go to an ex-spouse instead of a preferred party.
You may consider maximizing the share of your assets in these transfer on death accounts to ensure they can seamlessly pass to your loved ones. However, it may not be possible to concentrate all of your assets in these accounts, and you may still need to go through the probate process for other property.
Establish One or More Trusts
Establishing trusts is the most common way a family can avoid probate through prior estate planning. Numerous types of trusts can meet your family’s needs, and an estate planning attorney can advise you on what may work for you in your situation.
Establishing trusts allows you to deal with matters of property right now while you are still living. You create the terms of the trust and designate someone to serve as the trustee (in some cases, you can serve as the trustee for your own trust). They will need to manage the trust in accordance with its terms and their own fiduciary duties.
Assets in a trust stay out of probate because the trust already legally owns them. In probate, an asset needs to be retitled when it is transferred from the decedent to the heirs. Once the trust is created and the property has been moved into it, there is no need to retitle it. The trust already owns the asset, and no further legal steps are necessary.
The process of retitling is completed at the moment that the property is transferred into the trust. Thus, your estate will not need to go through probate because that part of the process has already been completed.
Revocable Trusts
Revocable trusts are one of the most common forms of trusts that families might use to avoid probate. Revocable trusts are flexible because you can change them at any time, so long as you have the capacity. You move the assets into the trust and select a trustee (which can even be you). Once you pass away, the assets can easily be transferred to your beneficiaries. Revocable trusts can be very helpful in allowing you to avoid probate, but they may not provide you with the full asset protection you are seeking.
Irrevocable Trusts
If you are looking for the maximum amount of asset protection, you may consider an irrevocable trust. Families establish these types of trusts when trying to move assets out of their name when trying to qualify for Medicaid coverage. Medicaid performs a lookback when you apply, so you need the assets out of your name well before that time.
The reason irrevocable trusts provide you with more protections is that you have no remaining indicia of ownership. You will not be the one who makes decisions about handling the assets, which is an indicator of ownership. The trustee is entirely responsible for the assets, and thus, you will no longer be a beneficial owner.
Trusts Can Cover a Variety of Purposes
Trusts can help meet your family’s needs beyond just helping you avoid the probate process. Some trusts that might be helpful to your family include:
- Special needs trusts - You can establish a trust to help care for someone in your family with special needs while still allowing them to retain their government benefits.
- Charitable trusts - You can realize tax benefits and devote some of your assets to help a favored charity.
- Spendthrift trusts - If you do not trust that one or more of your heirs will manage the money they receive prudently, you can establish a spendthrift trust, which can oversee how they use their money.
- Generation-skipping trust - You may not want to pass your money down to the next generation, but rather, you want the assets to continue being managed in a trust for the generation after.
Your estate planning lawyer can outline all available options when you enlist their help. You may consider one or more trusts to help your family.
Rely on Simplified Probate Procedures
There are other ways for a family to possibly avoid the probate process entirely or minimize the amount of work they face as part of the legal process. First, for estates below a certain amount, a family may use more simplified procedures under the laws of your state. Of course, each state is different, but a probate attorney near you can advise on simplified probate options.
Although you still need to go through probate, you will not have the same complex process as when the estate is worth more. Probate can be completed more quickly without some of the risks that your family will otherwise face. You still want a probate lawyer to oversee the simplified probate process, as challenges can always arise.
Speak with a Probate and Estate Planning Lawyer Now
Speaking with an estate planning lawyer to learn about your legal options is important. You may not even know what probate entails and why your family wants to avoid it if possible. The estate planning process is something that many people do not want to think about, though it is crucial to minimize the difficulties your family may face when you pass away.
You should never try to take a DIY approach to estate planning. Any mistakes you make can invalidate a legal document entirely, and they can set your family up for adverse and unwanted tax consequences. It is better to hire an estate planning lawyer to secure your family’s peace of mind. You are making an investment now in your family’s financial future.
When you hire an estate planning lawyer, they can do the following to help you:
- Speak to you and learn about your needs and what is important to you
- Review your particular situation and explain the options that are available to you and your family
- Helping you select the right types of trusts for your family
- Draft the necessary documentation to ensure that it is done correctly
Before you know what happened, it can be too late to get help from an estate planning attorney, so you should reach out to a lawyer now. They can assist you with protecting your family from a future involving probate, which can provide everyone some peace of mind.