Although the primary goal of an estate plan is to determine how your estate assets will be distributed when you die, another common goal is to avoid probate. There are a number of reasons why avoiding probate is a worthwhile goal. Understanding those reasons can help you develop an estate plan that allows your estate to avoid probate to the extent possible. In many cases, completely avoiding probate is not possible; however, there are many estate planning strategies that can significantly decrease your estate’s exposure to probate.
Probate is the legal process that is typically required after the death of an individual. During probate, the decedent’s assets must be identified, located, inventoried and valued. In addition, probate allows creditors to file claims against the estate. Before any estate assets can be transferred to the intended beneficiaries the probate process must be concluded in most cases. This can take months for even a very simple estate. More complex estates can take years to probate. This, coupled with the cost of probate, is why people often include probate avoidance among their estate planning goals.
Texas does offer an alternative to formal probate for small estates. If an estate’s total value, minus the homestead and exempt property, is less than $50,000 a small estate affidavit may be used to probate the estate. This option saves both time and money for the heirs of the estate.
For all other estates, including probate avoidance strategies in your estate plan is the key. Typically these strategies are aimed at removing assets from your estate prior to your death because the less property owned by you at the time of your death the simpler the probate process will be.
How you title property can help your estate avoid probate. By titling real property with rights of survivorship, for example, your spouse or other co-owner will inherit the property directly upon your death without the need for the property to pass through probate. Similarly, bank accounts, investment account, and retirement accounts often offer the option to designate a beneficiary by changing the ownership of the account to “payable on death”. This does not give the beneficiary rights to the assets while you are alive but does automatically transfer the ownership of the account when you die to the designated beneficiary.
Most other assets can be transferred into a living trust of you choose. By transferring assets into a properly drafted trust, they will no longer be a part of your estate when you die and, therefore, will not be part of the probate process.
If probate avoidance is one of your estate planning goals, be sure to sit down and discuss your options with your estate planning attorney.
- Famous Estates-Champ or Chump? Nelson Mandela - September 27, 2019
- Famous Estates-Champ or Chump? Jane Fonda - September 13, 2019
- Texas Trivia – Name the first of six flags to fly over Texas. - September 6, 2019