Every year, millions of dollars are spent upon the death of a loved one on fees associated with estate proceedings. Being able to bypass these proceedings could allow a decedent's assets to be distributed to a designated person at a designated time without those substantial costs.
Estate proceedings take time and money, and your beneficiaries are the ones who will have to pay the bill. Since those proceedings can take up to a year or two, assets are typically "frozen" until the court decides on the distribution. If the decedent's assets are not organized specifically to avoid those proceedings, there is no way for the beneficiaries to obtain legal ownership of the assets without going through with it.
Benefits of Avoiding Proceedings 4 Ways to By-pass Proceedings 1) Get Rid of All of Your Assets 2) Take Advantage of Joint Ownership 3) Use Beneficiary Designations 4) Use a Revocable Living Trust Final Note
Benefits of Avoiding Proceedings
It is often simpler and faster for beneficiaries to claim the funds.
You avoid court fees and executor’s fees (which can be significant, especially if the executor is legally entitled to a certain percentage of the estate).
You can keep matters private instead of appearing in public records, as you would with court proceedings.
4 Ways to By-pass Proceedings
1) Get Rid of All of Your Assets
The most extreme way to avoid estate proceedings is to get rid of all your assets when you are still alive. You will not have an estate to speak of if you do not own anything to transfer to beneficiaries after your death.
Of course, this is not practical because you will need money to live on until your death, but giving most of your assets away through the use of a legal vehicle may work in some cases. The key is to name yourself as a beneficiary of such separate entity.
2) Take Advantage of Joint Ownership
Adding a joint owner to a bank account, an investment account or to a real estate deed will also avoid estate proceedings, provided that it is clear that the asset is owned as joint tenants with rights of survivorship and not as tenants in common.
That word "survivorship" makes all the difference. Rights of survivorship guarantee that when one owner dies, their share of an asset automatically transfers to the survivor or survivors.
3) Use Beneficiary Designations
You are probably already taking advantage of this through the use of beneficiary designations if you own life insurance or assets held in a retirement account.
4) Use a Revocable Living Trust
A revocable living trust is a written agreement that covers three phases of your life:
While you are alive and well
If you become mentally incapacitated
After you die
Signing a revocable living trust agreement by itself is not enough to avoid probate of your property. You must also title your assets in the name of the trust. Your assets will only avoid probate after your revocable living trust has become the record owner of your assets instead of you.
This process is known as "funding" your trust. Think of your trust as a bucket. You have to fill the bucket with your assets to ensure that they will avoid probate. Any that remains outside of the bucket will require probate to transfer to a living beneficiary at the time of your death unless they have a beneficiary designation or they are owned with rights of survivorship.
Your financial and family situation will determine whether going through estate proceedings will have any impact, either financially or emotionally, or if keeping as many assets outside of those proceedings makes the most sense.
Writing your Will is the very first step, and it’s an important one. But that’s not enough. In the digital age, the next step is to store your Will online. Otherwise, what happens if nobody is able to find your Will in a timely manner? liteWill is the only registration platform that is available globally and that provides the option to store your Will online. ‘A Will that is not online is like a Will that does not exist’.
This portion of the website is for information only. The statements and opinions are the expression of their author, not of liteWill, and have not been evaluated for accuracy, completeness or changes in the law. Information contained in this article is not a substitute for tax or legal advice.
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