Your family and dearest friends will be suffering from the grief of losing you when your time in this world comes to a close. The last thing you’ll want to do is cause them even more stress and anxiety by not having your finances in order. Without a will or a living trust, you risk leaving your loved ones to pick up the pieces. You’re certainly not alone if you don’t have a will: according to a 2016 Gallup poll, the majority of Americans — around 55% — do not have a will in place.
Although your family members may have to go through probate court even if you’ve set aside a will, the process may be much simpler for them. With a living trust, they might be able to forego the probate process altogether. Probate can be a time-consuming and expensive process, so it’s important to know that there are options available that may help your loved ones avoid probate court.
What is a Living Trust?
Living trusts are similar to wills. They ensure that your assets do not have to go through probate court in order to be transferred to beneficiaries. You will be able to appoint one or more trustees to oversee the living trust. With a living trust you can:
- Transfer ownership of all your assets to trustees
- Name yourself as a trustee to ensure that you still have control of your assets and property prior to your death
- Transfer assets to other trustees
Designating a Beneficiary
Designating someone as a beneficiary when you pass away is a straightforward way to avoid your assets passing through probate.
Beneficiaries can be named for:
- Retirement Accounts
- Life Insurance Policies
- Bank Accounts
- Other Investment Accounts
These types of accounts do not have to go through probate prior to the beneficiary receiving the funds because they are considered “payable-on-death” or “transfer-on-death.” In some states, something called a “life estate deed” allows you to go through the same process with real estate property. Your property will be transferred to designated beneficiaries immediately following your passing.
Some individuals decide that they would like to gift property to beneficiaries prior to passing away. Costs tend to be higher for larger estates when going through probate proceedings, making it attractive to disperse assets in order to lessen the overall costs of probate beforehand. Some benefits of gifting property to beneficiaries include saving costs for your beneficiaries and possibly allowing them to avoid paying federal taxes.
Contact An Attorney
When it comes to preventing your estate from going through probate, there are a number of options available. An attorney, like a probate attorney Phoenix AZ residents need, who is experienced in estate planning can help you organize your estate, decide whether a will or a living trust is more beneficial for your estate, and fill out any required paperwork.
Thanks to our friends and contributors from Kamper Estrada, LLC for their insight into probate and living trust.