Do you have an estate plan? If not, now may be the time to develop one. After all, you've worked hard to raise a family, build a career, and accumulate assets. An estate plan protects those assets and helps you distribute them to your loved ones after you pass away. You can create documents and tools that help your family overcome financial challenges and enjoy the legacy that you left behind.
Your estate plan also may want to address probate, which can be a time-consuming and costly process for your heirs. Probate is the legal process for settling one's estate. It's managed by the estate executor and the local probate court, and it usually includes tasks like notifying heirs, liquidating assets, paying debts, filing tax returns, and more. Depending on the complexity of your estate, your heirs may need to hire lawyers, accountants, real estate agents and more. The fees associated with probate could drain your estate and could delay the distribution of assets. Fortunately, you can take steps to minimize probate's impact. Below are a few tips to consider:
Use accounts with beneficiary designations. Some assets and accounts are subject to probate. That primarily includes accounts with beneficiary designations, like your IRA, 401(k) plan, life insurance, annuities, and more. Instead, the beneficiaries on those accounts file a claim with the account administrator, who then distributes a payment. You could use these accounts to by pass probate and expedite the distribution of assets to your loved ones.
You could also set up a trust to distribute assets after your death. You decide which assets go into the trust and who are the trust's beneficiaries. The assets are then distributed according to your specific instructions. Since the trust has a beneficiary designation, all of the assets bypass probate.
Use joint accounts. Another way to bypass probate is to use joint-owned accounts when possible. For example, if you have a lump sum of money or a piece of property you want to give to a certain person, you could add that person as a joint owner with rights of survivorship. When you die, the account or property simply transfers to that person and doesn't go through probate. Of course, you want to make sure you can trust that person because they'll have the full rights of ownership, even before you pass away.
Give assets away. You could also minimize the amount of assets that go through probate by giving them away while you're alive. The added benefit of this strategy is that you get to see your loved ones put your assets to use before you pass away. You may want to consult with an estate planning attorney, though. Some states have look-back windows where they can include gifted assets in your estate for probate purposes. Your gifts may also trigger taxes. An estate planning professional can help you develop a strategy.
Ready to plan for probate and protect your loved ones? Contact an estate planning attorney in your area today, or visit a site like https://www.rmstoneattorney.com/