Probate / Wills
For most people, the main goal of estate planning is to get as much of their money and property to their loved ones as possible, without losing that money and property to the government, lawyers, and other parties.
In order for a will to be valid, it must be written, signed, and witnessed by two people. The individual creating the will must be at least 18 years old and must be of sound mind. A will can be amended through the use of a codicil or replaced entirely by the creation of a new will. An individual who dies without a will or another estate plan is said to die intestate. If an individual dies intestate, state statute will dictate how and to who the individual’s property is distributed. A will is an important part of any estate plan because it directs the distribution of property that is forgotten or acquired after the time of planning. Thus, wills serve as important estate planning safety nets.
However, while a will is a necessary catch-all and should be included as a part of any estate plan, a will should rarely, if ever, be the primary vehicle for an estate plan. The primary reason that a will should not be the primary form of an estate plan is that wills pass through probate. Probate is the court process that validates your will, pays your debts, and distributes your assets. The key to a successful estate plan is avoiding probate. Probate is undesirable for several reasons. First, probate is expensive. Any estate (assets such as real estate and personal property) that passes through probate will lose a portion of its value due to court costs and fees. In many cases, that can mean thousands of your hard-earned dollars passing to the government and other parties simply because of poor planning. Probate is unfavorable for other reasons. Probate takes a long time: a minimum of 6 months, but often over 1 year. Probate is also public: your assets and debts are public information to any interested party. Finally, your family has limited control over the process.
Fortunately, there are alternatives. Non-probate transfers for personal and real property avoid probate. For example, beneficiary deeds allow your real estate and non-titled personal property to transfer at your death and avoid probate. Titled personal property can be titled to transfer at death and avoid probate. Pay on death bank accounts also avoid probate.
Many trusts, such as the revocable living trust, also avoid probate. The revocable living trust is often the best trust for estate planning purposes. Because the revocable living trust is revocable, you maintain control. You can buy and sell assets and change or even cancel the trust. The revocable living trust is also private. The assets and debts held by the trust do not become public information. The revocable living trust can also be designed to provide for children in the event that one or both parents dies while the children are young.
By avoiding probate, an estate plan focused on non-probate transfers or a trust can save your loved ones thousands of dollars.
If you have additional questions about estate planning, including probate and wills, call or come visit the estate planning attorneys at the Paul Law Firm. Consultations are always free!