When it comes to preparing for the end of your life, things can get a bit convoluted. There’s a misconception that if you have a will, it must be honored. Unfortunately this isn’t the case. If the will is proven not valid, or the will is contested, your last wishes might be disregarded. As a result, your assets could be subject to probate. If you’re in the process of creating a last will and testament, you might be asking “how can I avoid probate?” Schottler & Associates can help.
What Is Probate?
Probate is also known as in court transfers of assets. This is where a decedent’s distribution of assets is decided in court based on law and judgement. This is opposed to out of court transfers known as non probate. Probate can be decided by testate or intestate law. Testate law means that a decedent had a valid will. Intestate law means that there was no will upon the person’s death or the will was not valid.
Assets that are subject to the probate process include any properties or assets in the decedent’s sole name. This includes personal belongings such as collectibles and even automobiles if there’s no beneficiary. If you hold a share of a property, or an investment known as tenants in common, this is subject to the process as well.
How Can I Avoid Probate?
Because assets that are in a decedent’s sole name go through probate, there are several ways to transfer property to another person.
- POD: Life insurance and IRAs avoid the in court transfer process because there is a named beneficiary. You can do the same thing with a bank account. By filling out a Payable On Death form, you can add a beneficiary who can go straight to the bank and access whatever is in your account.
- TOD: This is used in the same was as a POD. The difference is the type of account each form applies to. A TOD (transfer on death) is filled out for brokerage accounts and investment accounts. No assets can be accessed while you are alive.
- Joint Ownership: This is a popular and smart option for married couples. It grants rights of survivorship which is common in terms of joint tenancy and tenancy in common. When one spouse dies, the decedent’s share of property or asset is automatically inherited by the surviving spouse. This is not recommended for child-parent transfers of assets.
- Trusts: Trusts, such as revocable living trusts, transfer the name of the property from you, the sole owner, to a beneficiary. Provisions set by these trusts can be altered or revoked at any time during your life. Like a will, a trust allows you to specify your wishes. Unlike a will, your wishes do not become public which hold appeal for many. It is recommended to hold property and belongings in trusts rather than your own name.
Why Should You Avoid Probate?
There are many reasons people wish to avoid probate. The most important is also the simplest. It makes your loved ones lives easier and helps them avoid undue stress after your passing.
Probate can be a lengthy process and while trusts aren’t guaranteed, the settlement is often much speedier and straight forward. In probate, all participants must be involved in the process. When dealing with a trust, participants do not have to be involved to be included in the process and settlement.
If you live in the Chicago area and are curious about trusts or want to know how to avoid probate, contact Schottler & Associates.