Probating an estate can be a lengthy, costly, and sometimes acrimonious process. There are options that can help avoid probate for your estate.
Probate is the judicial process of proving a will after its maker, the decedent, dies. It also settles an estate if a person dies without a will. This process may be lengthy and complicated for larger estates or if there are many beneficiaries.
The estate’s executor will inventory all of the estate’s assets and liabilities. After assuring that creditors are satisfied, the executor oversees the distribution of assets to your heirs in accordance with the will. A judge will ultimately rule that the estate is settled but someone can contest or challenge your will.
First, probate is time-consuming. A court-approved executor must locate all the creditors, inventory assets and perform other administrative duties. Probate can take months and even years and delay distributing inheritances.
Probate may be expensive and involve legal costs and paying the executor for the time spent on the estate. Until probate is concluded, bank accounts and investments are frozen, and the estate cannot pay funeral costs.
Finally, privacy is lost. Assets involved in the estate, the identity of the beneficiaries and their inheritances become public.
Avoiding probate requires planning. First, determine whether avoiding probate costs more than the expense of the will.
Joint ownership of property is one method. Deeds to property, usually real estate, can state whether the property is joint tenancy with the right of survivorship which allows the surviving owner to take ownership without undergoing probate if the other owner dies. Other possibilities include joint tenancy by the entirety, and tenancy in common.
Next, designate beneficiaries on life insurance policies, bank accounts, securities brokerage accounts, pensions, 401(k) and 403(b) plans and IRA accounts. Assets go directly to beneficiaries on these accounts.
You can convert retirement and bank accounts to pay-on-death accounts by executing a beneficiary form. A beneficiary on death form can be used for securities accounts.
A revocable living trust allows property to be held in trust for you. It is not part of a probate proceeding because the trustee owns the property. You can specify who will receive the trust property after your death. However, maintaining a trust over your lifetime may be more costly than probate.
Finally, you may give gifts to your heirs before you die. But gifts over $15,000 in value to the same recipient each year are taxed.
An attorney can assist you with your estate planning goals. They can also prepare documents that comply with New York law.