A comprehensive estate plan can accomplish a wide range of inter-related goals. Making sure that loved ones are protected and financially secure after you are gone may be one of your estate planning goals. If so, you may also want to include probate avoidance as a goal to ensure that your loved ones actually receive the assets you left the in a timely manner. To help get you started, an Annapolis estate planning attorney explains three tools that can help your estate avoid probate.
Why Should My Estate Avoid Probate?
When most people die, they leave behind an estate that consists of all assets, both tangible and intangible, owned by the decedent at the time of death. Probate is the legal process by which those assets are identified, located, valued, and eventually distributed to the intended beneficiaries and/or legal heirs of the estate. If your estate goes through probate, the terms of your Will, and therefore the gifts you made in that Will, become public record which is one reason people actively try to avoid probate. Probate is also time consuming. In Maryland, creditors have six months to file claims. Consequently, probating even a modest and uncomplicated estate typically takes a minimum of about eight months. Often, the probate process can take a year or longer, meaning beneficiaries must often wait a long time to receive their intended gifts. Probate is also expensive because everyone involved in the probate of an estate, including the Executor/PR, attorneys, appraisers, real estate agents, and accountants, is entitled to a fee for their services.
3 Tools for Avoiding Probate
The good news is that with careful planning you should be able to structure your estate so that the majority of your estate bypasses probate. The following strategies can help:
- . Assets held in a trust are non-probate assets and can be distributed immediately if the trust terms dictate. Most assets, including your home, can be held in a trust. Using a trust as your primary method for distribution of your estate assets can dramatically reduce the size and value of your probate estate.
- . The manner in which assets are titled can also be used to avoid probate. Real property, for example, can be held jointly with rights of survivorship, allowing your interest in the property to pass directly to the co-owner upon your death without first going through probate. Certain accounts can also be designated as “Payable on Death (POD)” or “Transfer on Death (TOD)” accounts which allows you to designate a beneficiary who will automatically become the owner of the assets held in the account upon your death. Unlike jointly held assets, however, a beneficiary of a POD or TOD account has no ownership interest in the asset while you are alive.
- . Certain types of jointly held property will bypass probate. The key is that the property must be held jointly with rights of survivorship. Your interest in jointly held property with rights of survivorship will pass directly to the co-owner upon your death.
Contact an Annapolis Estate Planning Attorney
For more information, please join us for an upcoming FREE webinar. If you have additional questions or concerns about avoiding probate, contact an experienced Annapolis estate planning attorney at Sinclair Prosser Law Gasior by calling (410) 573-4818 to schedule an appointment.
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