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SHOULD I USE A WILL TO PROBATE MY ASSETS OR AVOID PROBATE COMPLETELY?

SHOULD I USE A WILL TO PROBATE MY ASSETS OR AVOID PROBATE COMPLETELY?

There are two strategies in estate planning. Do we want to go through Probate, or do we avoid probate at all costs?

Like everything else there are both pros and cons to consider.

 

What is “Probate”?

Probate is how a person’s Estate (“their stuff”) passes to their heirs. Probate is used to transfer title to any assets that are solely in your name and owned by you at the time of your death. These assets are typically solely in your name and did not pass to someone else by operation of law.

If the person who died left a valid Will (Testate – with a Will), a Probate Court accepts the Will. The executor, the person the deceased in the will now has the authority to go about the business of settling the estate.

The Probate Court does not have much to do, because the Will and other estate plan documents tell the executor what to do.

 

What if I Die without a Will (Intestate)? Do my Assets go through Probate?

The Probate Court is more involved if a person dies without leaving a valid Will. We call that an Intestate Estate. During an intestate Estate the Probate Court will appoint an administrator to settle the estate.

Without the guidance of a Will, the administration of the estate is much more frustrating, time-consuming, and costly.

 

What are the Biggest Deterrents with Probate?

Probate is a public proceeding and can take at a minimum 7 months or years and probate often results in family fights or feuds that last forever…

 

How do I avoid Probate?

As Probate is a time consuming and costly process and choose to avoid the potential for family fights when they pass away.

To avoid Probate, we can establish a Trust to Protect your Assets and avoid Probate.

 

Revocable Living Trust – Revocable living trusts can help you avoid guardianship and probate, while protecting the assets for your spouse or children. This is possible because the assets in the trust are not owned “solely in your name” at your death, they avoid probate. If you become disabled, a successor trustee named in the trust takes over management of the trust assets. Upon your death, the assets pass as stated in the trust document. In other words, they could go straight to your beneficiaries or into another trust.

 

Joint Tenancy & Tenancy by the Entirety – One way to quickly transfer assets to an heir without the need for probate is by making the heir a joint owner or “joint tenant with right of survivorship.” You often see this with the marital home. Couples typically own their homes jointly with a right of survivorship.

However, this method of avoiding probate does have some faults.

For example: the assets may be vulnerable to your co-owner’s creditors. Additionally, there can be significant tax consequences if you transfer or change title to assets during your lifetime. Using the right trust avoids these tax consequences Beneficiary Designations – You can add Transfer on Death (TOD) or Pay on Death (POD) beneficiary designations to your financial accounts. Upon your death, the funds in those account are passed to the beneficiaries immediately. No probate court action will be needed!

To Probate or Not to Probate is the Question you will have to answer.

Do I Need Estate Planning?

The State of Alabama provides an estate plan for everyone. It is a one size, and it fits everyone. Fits everyone? Not really.

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417 4th Avenue SW #270 Cullman, AL

204 Main Street Suite 128 Trussville, AL

Serving Alabama with customized Estate Planning.

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