Avoiding Probate

Probate is the process of going through the probate court to have your belongings distributed to your heirs.  If you have a last will and testament the probate court will first ensure that it has been properly created and executed, as it will serve as written instructions that the court and your executor will follow to distribute all your belongings mentioned in the last will and testament to the beneficiaries you name in your last will and testament.  However, even if you have a last will and testament you will not be avoiding probate, but will have your belongings or estate taken through the probate court by way of your written instructions in a last will and testament.  Taking some action to take advantage of avoiding probate can sometimes eliminate the need to have anything in your belongings or estate to go through the probate court at all.

 

The probate process can take several months or years depending on the size of your estate and the type of belongings you have to distribute.  Also it can be expensive with court fees and usually lawyer fees.  The total cost can be around $1000 to $10,000-$30,000 or more depending on the situation.

Passing assets outside of probate keeps them private, avoids will contests — for instance, when blood relatives are hostile toward a domestic partner or new spouse — and simplifies planning for elderly people with just one child they wish to benefit.

For some people, going through probate will not be too big of a hassle.  The State of Georgia has a pretty good website with helpful resources such as definitions of terms, explanations of procedures and even some fillable forms.  However, there are some common and even simple ways to avoid probate for some of your most important and valuable belongings.

Write a Living Trust

A living trust places your assets and property “in trust” which are then managed by a trustee for the benefit of your beneficiaries. It allows you to avoid probate entirely because the property and assets are already distributed to the trust before your death.

Name beneficiaries on your retirement and bank accounts

Many of our most valued assets allow us to name beneficiaries.  Take the time to actually name a beneficiary or beneficiaries for bank accounts, investments and retirement plans.  There are payable on death accounts, such as life insurance policies, pension plans, 401K plans, IRA accounts, stocks and bonds.

All you need to do is request and fill out the payable on death forms that your brokerage company or bank can provide. Remember, if you are married, some of these accounts automatically may be partially owned by your spouse if opened while you were married. But by taking the time to fill out these forms, you ensure that the proceeds are immediately dispersed at death to whoever is named as your beneficiary(ies) without having to pass through probate – sparing a lot of time and a lot of expense.

If you get divorced or relationships change, remember to change the beneficiaries if those individuals are named as beneficiaries and you would not want them as one any longer.

Changing Deeds and Titles of Property Ownership

In Georgia the most common way real estate is held is as a joint tenancy.  Which means if either of the “joint tenants” or owners of the real estate property were to die the property would be divided and the spouse would most likely own a third of that deceased owner’s half and the deceased owner’s children would divide the remaining 2/3 of the real estate property.  This can obviously be a problem as real estate is not something you easily can divide up like cash.

However, you can change the deeds or titles to add additional owners, such as your children or spouse and have the property ownership deeded to say “joint tenants with right of survivorship” this means if either of the owners listed dies, the remaining owners receive that deceased owner’s share of the property.  So if parents title their children onto a real estate property deed as joint tenants with right of survivorship, the children will instantly become full owners of the real estate property the second the last parent dies.  The transfer occurs without involving the probate court.  You can do this with anything that has a deed or title attached to it like real estate property or vehicles for examples.

There can be tax ramifications here if the real estate property is receiving a “senior citizen” discount on property taxes or even income taxes as receiving property becomes an increase in income.   A tax advisor should be consulted for this and many forms of avoiding probate to ensure you have a full grasp and picture of what you choose and how it could affect your overall tax liability.

Feel free to contact our office if you would like further information specific to your situation about how you can take advantage of avoiding probate or would like to begin the process by having real estate deeds written up as “joint tenants with right of survivorship”, having a living trust created, or even a last will and testament written.

 

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