You will inevitably come upon the term “probate avoidance” when you are doing some research into the topic of estate planning and may wonder what it means or if it is important. If you use a last will as your primary vehicle of asset transfer when you are engaged in legacy planning it does not exist in a vacuum to be read among family members upon your death.
Your will must be determined valid by the probate or surrogate court. The court will then supervise the administration of the estate. This gives creditors an opportunity to seek satisfaction of any debt you owe them, and it also provides a forum for individuals who may want to challenge the will.
Many people do not want to leave an opening for disgruntled parties to contest their wishes. This is one reason why so many people want to avoid probate. Another is the fact that your heirs do not receive their inheritances until the estate has been probated, and probate can take a long time to run its course. In ordinary cases it can take 12-18 months. In some contested cases it can take a number of years.
There are many strategies available to avoid probate. The ideal way is going to vary depending on the specific nature of your estate and what you are attempting to accomplish with your legacy. This said, one simple and straightforward way to transfer assets to your loved ones outside of probate is via the creation of pay on death or transfer on death accounts.
These accounts are routinely offered by banks, credit unions, and some brokerage firms. When you open the account you name a beneficiary on the account. While you’re alive this beneficiary can’t touch the funds and you have total control. At the time of your death the beneficiary inherits the funds in the account with no hassles or time lags outside of the process of probate.
Pay on death accounts are a useful tool but they are by no means a complete solution. To gain an understanding of comprehensive probate avoidance strategies, pick up the phone right now and arrange for a consultation with an experienced estate planning attorney.
Author, President and Founding Attorney
Parman & Easterday