A properly prepared estate plan is critical if you have minor children who would need a guardian, are part of a blended family, are unmarried in a committed relationship, or have complicated family dynamics—especially those with drama. There are things you can do to protect yourself and your loved ones, as described in the article “Try these steps to minimize your probate estate” from the Indianapolis Business Journal.
Probate is how debts are paid, and assets are divided after a person passes away. There will be a probate of an estate whether or not you did a will and estate plan, but with no careful planning, there will be added emotional strain, costs, and challenges left to your family.
Dying with no will, known as “intestacy,” means the state’s laws determine who inherits your possessions, subject to probate. Depending on where you live, your spouse could inherit everything, or half of everything, with the rest equally divided among your children. Your parents may inherit everything if you have no children and no spouse. If you have no children, spouse, or living parents, the next of kin might be your heir. An estate planning attorney can ensure your will directs your property’s distribution.
Probate is the process of giving someone you designate in your will—the executor—the authority to inventory your assets, pay debts and taxes, and eventually transfer assets to heirs. In an estate, there are two types of assets—probate and non-probate. Only assets subject to the probate process need to go through probate. All other assets pass directly to new owners without the court’s involvement or becoming part of the public record.
Many people embark on estate planning to avoid having their assets pass through probate. This may be because they don’t want anyone to know what they own, don’t wish creditors or estranged family members to know what they own, or want to enhance their privacy. An estate plan takes assets out of the estate and places them under ownership to retain privacy.
Some of the ways to remove assets from the probate process are:
Living trusts. Assets are moved into the trust, meaning the ownership title must change. There are pros and cons to using a living trust, which your estate planning attorney can review with you.
Beneficiary designations. Retirement accounts, investment accounts, and insurance policies are among the assets with a named beneficiary. These assets can go directly to beneficiaries upon your death. Make sure your named beneficiaries are current.
Payable on Death (POD) or Transferable on Death (TOD) accounts. It sounds like a simple solution to own many accounts and assets jointly. However, it has its challenges. If you wished the assets in a POD or TOD account to go to anyone else but the co-owner, there’s no way to enforce your wishes.
An experienced, local estate planning attorney will be the best resource to prepare your estate for probate. If there is no estate plan, the court may appoint an administrator, and the entire distribution of your assets will be done under court supervision. This takes longer and will include higher court costs.
Reference: Indianapolis Business Journal (Aug. 26, 2022) “Try these steps to minimize your probate estate.”
