After death, the process of transferring assets to the rightful beneficiaries can both be financially and emotionally taxing, depending on the arrangements. While circumstances may differ from client to client, most lawyers and financial experts recommend passing the probate process.
Famous for being expensive and lengthy, probate can be a harsh proceeding for any heir or beneficiary. By preventing this complex process from occurring, you can avoid numerous costs, from appraisal, accounting, and attorney to court fees. And most importantly, you get to reduce the likelihood of family disputes, delays, and extra expenses. In the following discussion, you will learn more about probate and how you can avoid it.
1. Hire an estate planning lawyer
The probate process is a long and complex process that requires the assistance of a legal expert. An estate planning attorney can help you with. Hiring one allows you to create and own the legal document necessary to swift the probate proceeding. Depending on your situation and needs, such lawyers can help you set up a trust or will, which is vital for successful and valid estate planning. Estate planning lawyers ensure all assets are titled and named correctly and that you name the rightful beneficiaries as well.
What’s more, you don’t have to bother about estate taxes when you hire such experts. At the same time, they can maximize your wealth by reducing your tax liabilities, from assessing your current debt to identifying liable tax deductions. Lastly, an estate planning lawyer can guarantee that all the necessary documents are drafted and executed professionally and comply with the current law.
2. Establish your living trust
Creating a living trust is one of the best ways to prevent the probate process. Compared to the last will, your living trust helps secure your property and assets by having a trustee. And since the distribution is already done via trust, you won’t need to go through the probate process. Are you worried about probating a will and its cost?
A living trust can also help you avoid such. You don’t need to worry about the fees involved in passing the will through the courts. Generally, court fees can go as high as 10% of your total estate. Besides avoiding probate and saving money, a living trust offers you privacy, peace of mind, and certainty that all your assets are well-protected.
3. Consider joint ownership
Aside from writing a living trust, you can avoid probate by establishing joint ownership. The general rule is that the title of the real estate property will be automatically passed to the remaining owner when the one dies. You have three options to do this, with each one having survivorship rights. These include joint tenancy with survivorship rights and other two commonly used for married couples: the tenancy in common and the tenancy by the entirety.
Regardless of what is applicable for your situation, property, and location, the first thing you should focus on is ensuring the real estate is titled correctly. If not, you will have to create a new deed intended for the rights of survivorship. A few drawbacks to joint ownership to take note of are triggering the federal gift tax, all or half of the property may be subject to the estate tax purposes of the deceased, and the joint owner obtaining certain rights.
4. Gift your assets
The last on our list is giving the assets as a gift. You can avoid the costly and lengthy probate process by gifting your real estate property to your beneficiary. This means that the property will no longer be legally yours. This may also reduce the value of the real estate property. Gifting assets to a charity or family member won’t require you to create a living trust or a will.
If you opt for this process, you’ll need to report each gifted asset to the IRS. Check their website to see the updated guidelines and rules you need to follow when gifting real estate properties. Just ensure to treat carefully as gifting assets also comes with natural drawbacks, such as losing asset benefits and control and some negative tax consequences.
If you and the other beneficiaries want to get the transfers done without delays or disputes, it’s highly advisable to skip the probate proceeding. Seek the help of the right professionals, from estate planning to financial management, to avoid further problems. Nonetheless, please note that every situation is unique, so it’s best to consult your family attorney to check your options and how you can plan.