Part 2 of a 3-Part Series
Last week, we began a three-part series about probate-proof estates. In part one, we covered reasons you should try to avoid probate. This week, we continue our series by focusing on a strategy we called the “Piecemeal Approach.” Finally, next week, we will conclude the series by delving further into the estate planning processes to provide you with information you need to help keep your family from facing probate when you die.
Why avoid probate?
- Probate is Costly
The total cost of probate can be anywhere from 5 percent to 15 percent of the total value of the estate, varying in cost from state to state. These costs are deducted from the estate, which means your beneficiaries will never see that money.
- Time-consuming
Even for a modest estate, probate can last between 6 months to a year, providing there are no complications. Your heirs won’t receive their inheritance until probate is complete. Some places do have “independent” or “summary” administration rules that speed probate up, but they still cost money and are a public process.
- Public
One of the biggest drawbacks to probate is that it makes private matters public. When your estate is probated, your financial information, identities of your heirs and other personal information all become a matter of public record, accessible to anyone who wants to look it up, possibly even online depending on the court system where your estate is probated
Strategies for probate-proofing your estate:
The good news is that probate is quite easily avoidable, and there are a number of effective planning tools that can help you. Since probate only applies to assets listed solely in your name, the primary goal of your estate planning strategy might simply be to make sure you’re not the sole owner of those assets when you pass away. The safest way to create a probate-proof estate plan is to work with an estate planning attorney to devise a customized solution. Then update that plan regularly to reflect any changes that occur in the future. For now, let’s look briefly at two general strategies for probate-proofing your estate, and the pros and cons of each.
Strategy 1: The “Piecemeal” Probate-Busting Approach
This strategy involves going through all your assets one by one and structuring them so that they are either joint-owned with one or more of your heirs or transferred immediately upon your death. For example, for any real estate holdings, you might add one or more beneficiaries as a joint owner. Or, you could insert a Transfer on Death (TOD) clause that immediately transfers ownership to the other party when you pass away. You can also establish joint ownership on bank accounts or insert a Payable on Death (POD) provision; and for insurance policies and certain other assets, designating a beneficiary may be sufficient to protect them from probate.
Check back next week. We will conclude this series by discussing the pros and cons of this strategy. We will also discuss another approach, designed to help your heirs skip probate.
Skvarna Law Firm
A skilled attorney can assist with your estate plan. Contact us today to learn about your options (909) 608-7671. We operate offices in Glendora and Upland, California. We provide legal services for individuals living in San Bernardino, Los Angeles, Orange and Riverside Counties. This includes the cities of Upland, Ontario, Rancho Cucamonga, Fontana, Colton, Rialto, Chino, Chino Hills, Glendora, Claremont, Montclair, Pomona, La Verne, San Dimas, Azusa, Covina, West Covina, Diamond Bar, Walnut, La Puente, Corona, Norco & Mira Loma. Visit SkvarnaLaw.com to learn more.
