Many times it happens when a person dies – a major chunk of the estate is taken away from the rightful heirs during probate. In addition, while the probate proceedings are going on, the estate is frozen and the spouse and children cannot get access to any of the assets for weeks and sometimes for months.
Estate planning is something most of us try to avoid but little do we realize that the cost of procrastination has to be borne by our loved ones. Here are four steps that will help you avoid probate so that while your loved ones are grieving, they will not be under any financial stress.
Step 1: You have make sure that you have the right beneficiaries mentioned on your life insurance and retirement accounts. If the information is correct, then all funds and proceeds like annuities, retirement fund and life insurance money will directly go the beneficiaries.
Step 2: For all your other accounts, request your bank or broker to put a Pay on Death (POD) designation or Transfer on Death (TOD) registration. If the bank account has POD, there will be no need for probate and the proceeds will go directly to the beneficiary. The same also applies to TOD registration.
Step 3: Check the titles of all your other assets and accounts. Assets that have joint tenants with right of survivorship title go directly to the surviving joint tenant and thereby avoiding probate. However, here you should note is that the joint tenant’s creditors will also have access to the assets and accounts; for those with taxable estate, joint tenancy is not the ideal way out.
Step 4: If you large assets, the best way forward is a revocable living trust. You can transfer assets like investments, vehicles, bank accounts, jewelry, antiques, furniture and real estate to the trust. Although the assets become part of the trust, you still have control and access to them.
Taking these steps does not mean that you should not draw out a will, you should. In a will you can cover other matters that are not covered by beneficiary designation, account titling and living trust. Make sure you take steps to minimize estate tax and other issues like step-up in cost basis and community property laws, if applicable.
About Author:
Pauline Go is an online leading expert in education industry. She also offers top quality parenting tips like :
Cute Baby Names & Low Progesterone And Infertility.