For most people, the primary motivation for creating an estate plan is to ensure that their estate assets are distributed according to their wishes after they are gone. A comprehensive estate plan, however, can accomplish a great deal more than just providing a road map for the distribution of assets. In fact, a well drafted estate plan can also help to protect and grow those assets while you are alive as well as ensure that they help provide for loved ones after you are gone. The additional components you choose to include in your estate plan will depend on your unique estate planning goals and objectives; however, a common estate planning goal is probate avoidance. With that in mind, the Port St. Lucie probate attorneys at Kulas & Crawford explain why probate avoidance is a common goal and offer tips that will help your estate avoid probate.
What Is Probate?
Probate is the legal process that is typically required following the death of an individual. Probate serves a number of different functions, including:
- Authentication of the decedent’s Last Will and Testament (if one was left behind)
- Identifying, valuing and eventually distributing estate assets
- Notifying creditors of the estate and allowing them to file claims against the estate
- Ensuring that state and federal taxes owed by the estate are paid
- Providing a legal forum for challenging the decedent’s Will
Why Is Probate Avoidance Desirable?
Probate avoidance is a very popular estate planning goal for several reasons. First, the probate process can be very long. Unless an estate qualifies for a small estate alternative to formal probate, it will typically take a minimum of four to six months to probate even a relatively modest estate. In the State of Florida, creditors have 90 days after the Notice to Creditors is published to file a claim against the estate, meaning the probate process must remain open for at least three months after the notice is published. For more complex estates, it is not unusual for it to take longer than a year to complete the probate of the estate. In the meantime, estate assets remain inaccessible to the intended beneficiaries of the estate.
The other reason people often go to great lengths to avoid probate is the expense. There are a number of expenses that go along with the probate of an estate – and the longer it takes to get through probate, the higher those expenses as a general rule. Everyone involved in the probate process is entitled to a fee, including the Executor, estate planning attorney, appraisers, and accountants. It can also be costly to maintain estate assets during the probate of the estate. All of these expenses are paid out of the estate assets, thereby diminishing the value of the estate and providing a strong incentive to avoid probate when possible.
Tips for Avoiding Probate
The good news is that there are a number of probate avoidance strategies you can include in your overall estate plan to help your estate avoid probate. The key to avoiding probate, when possible, is to limit the number of probate assets you own at the time of your death. Not all assets are required to go through the probate process. Non-probate assets bypass probate altogether and can, therefore, be distributed to the intended beneficiary right away. The following tips may help you reduce your probate assets:
- Create a trust. Assets held in a trust bypass probate. By creating a trust, you can transfer most probate assets into the trust and effectively turn them into non-probate assets.
- Title property jointly with rights of survivorship. Your interest in your house, for example, could transfer directly to a spouse or adult child after your death if titled properly.
- Change account designations to “payable on death (POD)” or “transfer on death (TOD).” Assets held in a financial account, when designated as POD, will automatically become the property of the designated beneficiary upon your death; however, the beneficiary has no legal rights to the assets while you are alive.
- Use life insurance proceeds creatively. Life insurance proceeds are paid out directly to the beneficiary after your death. One creative way to use these proceeds is to create a funeral trust and fund it with the proceeds of a life insurance policy. The policy then pays for your funeral and the terms of the trust ensure that your wishes are honored.
Contact Port St. Lucie Probate Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns regarding probate avoidance, contact the experienced Port St. Lucie probate attorneys at Kulas & Crawford by calling (772) 398-0720 to schedule an appointment.