How to Avoid Probate and Minimize Estate Administration Duties
Understanding how to avoid probate can expedite estate settlement procedures and ease responsibilities of the estate administrator. Probate is a legal requirement within all U.S. states. The average duration of probate is 6 to 9 months. When inheritance property is not protected with a legal Will, probate can be prolonged by several months.
Learning how to avoid probate is best achieved by consulting with a probate lawyer or professional estate planner. Many financial institutions partner with estate planning service providers to offer clients a discounted rate. Probate lawyers and estate planners often provide complimentary sessions to discuss which estate planning measures are best suited for their needs.
When a person dies without executing a last will and testament, the probate process requires additional time. An estate executor must be confirmed through probate court. This person is usually the surviving spouse or direct relative to the decedent.
If there is no spouse, or if family members do not want the responsibility of settling the estate, the court can appoint a neutral party to administer the estate throughout the probate process. This can be a probate attorney, estate planner, or a friend of the family.
Estate administrators are compensated for their duties according to state probate laws. Some states allow probate executors to charge an hourly wage, while others assess a flat fee or percentage of the estate value.
Keeping inheritance property out of probate can be accomplished by various means. The easiest way to avoid probate is to transfer assets to a trust. Several types of trusts exist, but all are managed by an appointed Trustee. Trusts are typically reserved for estates valued over 0,000 and require the services of a professional estate planner.
Estates valued below 0,000 can protect inheritance property by assigning beneficiaries to receive proceeds upon death. Transfer-on-death beneficiaries can be established for financial investment accounts and titled property. Real estate can be transferred by establishing joint tenancy with rights of survivorship.
Bank accounts and retirement funds can transfer by establishing payable-on-death beneficiaries. POD forms are available through financial institutions. Account holders can designate as many beneficiaries as desired and establish a percentage of funds to transfer upon death. Banks require contact information for beneficiaries including name, address, date of birth, and social security number.
Inheritance property bequeathed through POD or TOD accounts cannot be distributed until the probate personal representative submits date-of-death value forms to the county tax assessor. As long as decedents do not owe outstanding taxes, the Assessor’s office will sign and stamp the forms. Financial institutions typically release funds to named beneficiaries within 5 to 7 business days after receiving stamped tax forms.
A little known way to avoid probate is by gifting inheritance property while still alive. The Internal Revenue Service allows individuals to gift up to ,000 per person or ,000 per married couple, tax-free each year. When gifting exceeds these amounts, recipients must file a federal gift tax return and pay inheritance tax.
Learning how to avoid probate and implementing estate planning strategies is one of the best gifts anyone can leave their loved ones. It is important to put affairs in order by executing a legal Will and designating beneficiaries regardless of estate value or types of inheritance property.
Probate can be a difficult and time-consuming process that can deplete financial resources and end up leaving heirs empty-handed. Taking time to protect inheritance property will minimize the time and finances required to settle the estate.
Real estate investor and probate liquidator, Simon Volkov, shares information about the probate process and estate planning, along with tips regarding how to avoid probate via his website at www.SimonVolkov.com.