The court process of validating your will and overseeing the distribution of your estate, commonly known as probate, is often slow, costly and open to public scrutiny. For your grieving loved ones, this can be a stressful and frustrating experience, given that they must see the legal proceedings through before getting their inheritances. Fortunately, it doesn’t have to be the case.
With some thoughtful estate planning, you can help your heirs avoid probate court and ensure they receive their inheritances without unnecessary delays or expenses. Here’s what you can do to achieve this.
Use beneficiary designations
Some assets don’t have to go through probate at all if you name a beneficiary. These include life insurance policies, retirement accounts and payable-on-death bank accounts. When you pass away, they will automatically transfer to the named individuals without a court process.
Set up a living trust
A living trust can also help you bypass probate. When you transfer assets to the trust, your chosen trustee will manage and distribute them to your heirs according to your instructions. Coupled with their asset protection benefits, trusts can be one of the best ways to make things easy for your loved ones when you’re gone.
Own property jointly
Owning property jointly with rights of survivorship can keep them out of probate. When you die, the other owner will take on ownership without having to go to court. That said, it helps to be wary of the potential downsides of jointly owning property, such as losing full control or exposure to the co-owner’s financial troubles.
Gift assets
Assets you give as gifts will not go through probate as they no longer belong to you. However, gifting assets requires careful planning to avoid unintended tax consequences.
Remember to keep your estate plan updated. Assets that are unaccounted for in your estate plan will have to go through probate. An outdated plan can also lead to disputes and confusion among your loved ones. Getting qualified estate planning guidance is also invaluable. Your family’s unique dynamics might require tailored solutions since estate planning is not one-size-fits-all.