Nobody likes the idea of jumping through legal hoops, especially when passing on what you have worked hard for. For this reason, it is important to understand what the legal process of probate is and why it is important to consider it in your estate planning.
Understanding probate
Probate is the legal process that happens after a person passes away and leaves behind assets. If the person left a will, someone needs to file it with the court and the court will ensure the will is genuine and legally valid.
If there is a will, the court then appoints an executor (if the deceased person did not designate one in their will) who carries out the deceased person’s wishes and manages the distribution of assets.
The executor’s duty is to distribute the assets according to the terms outlined in the will. This could involve selling property, paying debts and dividing the remaining assets among beneficiaries.
Court oversight
The court oversees the entire process of probate, which involves validating the will, confirming the appointment of the executor or appointing an executor and ensuring the distribution of assets in line with the law. The probate process and all documents related to it are a matter of public record.
Benefits of avoiding probate
There are ways to avoid probate and many people choose that route because of the many benefits that come with avoiding the probate process. In short, the major benefits of avoiding probate are that:
- It saves time
- It can be private instead of public
- It is much less expensive
You may wonder how people avoid the probate process. There are legal ways to do this, of course, most commonly through living trusts, also called revocable trusts.
Revocable trusts
You can set up a trust to hold your assets while you are alive, and you keep the right to change or revoke it at any time. In the event of your passing, you can select an executor to distribute your assets directly to your beneficiaries without probate interference.
Joint ownership
Another way of avoiding probate is through joint ownership. If you share ownership of assets with someone, like a spouse or child, the property passes on to them without going through probate because they own it.
Beneficiary designations
Lastly, you can also consider beneficiary designations, which essentially means naming beneficiaries for things like life insurance policies and retirement accounts. If you designate a beneficiary for everything in this way, you are ensuring those assets skip probate and go straight to your beneficiaries.
Avoiding probate can be a wise choice for many. It keeps the distribution of assets simple; it saves time, maintains privacy, and preserves your hard-earned money. Your loved ones will thank you for the smoother process.