What to do about Probate?

Estate planning is an uncomfortable subject to face.  Time and time again, we see clients grapple with some of the toughest decisions regarding unimaginable situations, but without fail our clients feel a sense of calm and peace when the process is done.  But why is it so important to make a plan?  For most people, the problem with estate planning is PROBATE.  Probate is the process by which a deceased person’s assets are inventoried and distributed to their beneficiaries.  Sounds easy, right?  Unfortunately, it’s not. Probate is time consuming – taking between six months and up to many years, assets can get tied up in the court system, beneficiaries (including minor children) can be forced to go without proper monetary support, and costs rise rapidly.  Many people think that if you carefully draft a will, then the probate process won’t occur or might be easier in some major way – this is another misconception.  We always say, “Your will is your ticket to probate.”  The will instructs your executor and the court regarding what the decedent (person who passed away) wanted.

How do we avoid or mitigate the process of probate?  That’s where we come in.  When working with clients, we are focused on probate avoidance.  Even if we are not doing a trust, we still advise clients regarding how to avoid or simplify the probate process for their heirs.  The first tool we’ll talk about is beneficiary designation:

1)      Beneficiary Designation:

This is a huge one – almost every asset can be “beneficiaried.”  Have a home?  Transfer on Death Deed.  Have a 401K or securities account?  Add a listed beneficiary and contingent beneficiary to the account with your financial planner.  Have a bank account?  List “Pay on Death” (POD) designees on the account.  By listing beneficiaries on an asset, as long as the beneficiary is living at the time you pass away, the asset will transfer to them the moment you pass away.  The probate process is avoided and the person is able to take custody of the asset.

2)      Trusts:

Trusts are the catch-all entities that can hold assets, and when an asset is funded into a trust, it avoids the probate process.  For example, you deed the home into the trust, beneficiary the accounts into the trust, and assign all personal property to the trust.  That means every asset in the trust can be used by your beneficiaries (guided by the decision-maker Trustee) without having to go through the probate process.  There are lots of other tools that can be used with trust, such as legacy planning – if you have questions about that, give us a call to discuss!  703-771-9740

Facing all these topics can be overwhelming.  We try to keep things easy and accessible for our clients. Give us a call to set up a free meeting to go over options.  We’re happy to help you get the ball rolling!  703-771-9740.