Probate is the legal process that follows the death of an estate owner. One purpose of probate is to ensure that all your assets are identified and eventually disbursed to your intended beneficiaries or heirs. The probate process, however, can be lengthy and costly, leading to the question “ Can probate be avoided? ” With careful estate planning, it is possible to dramatically decrease, if not completely eliminate, your estate’s exposure to probate after your death.
When you die, all of your assets will need to be identified, located, and valued as part of the probate process. In addition, potential creditors of your estate must be notified and afforded an opportunity to file a claim against your estate. Eventually, gift and estate taxes, as well as personal taxes, are prepared and paid after which your estate assets can finally be distributed to beneficiaries or heirs. As you can imagine, the larger and more complex your estate is, the longer the probate process takes. Even a small estate can easily take over a year to probate. Not surprisingly, therefore, probate avoidance is a popular objective of any well thought out estate plan.
One of the easiest ways to avoid probate is to make sure that your estate assets are non-probate assets. Common ways of accomplishing this include:
Life insurance – proceeds from a life insurance policy do not go through probate because they are not owned by the decedent.
POD/TOD accounts – many financial accounts as well as securities can be designated as a “Payable on Death” or “Transfer on Death” account. When you designate an account as a POD or TOD account you name a beneficiary who will automatically become the owner of the assets held in the account when the account owner dies. Unlike joint ownership, the beneficiary has no ownership interest while the account owner is alive; however, will become the owner without the assets going through probate upon the death of the account owner.
Trusts – assets owned by a trust may not be included in the probate of your estate. Instead, they will be distributed according to the terms of the trust.
Joint ownership – property owned jointly may not pass through probate. Joint ownership with rights of survivorship, specifically, allows your interest in the asset to pass automatically to the co-owner without the need to pass through probate.
If you have additional questions about how to include probate avoidance strategies in your estate plan, contact the experienced South Carolina estate planning attorneys at Kuhn & Kuhn Law Firm by calling 843-577-3700 to schedule your appointment.