Protecting estate assets involves engaging in estate planning strategies prior to death. In the U.S. all estates must undergo probate unless assets are transferred into a trust. Probate can extend for several months and prevent heirs from receiving intended inheritance gifts if the estate does not have sufficient funds to cover outstanding debts.
When estate assets are transferred to a trust they are exempt from probate. Distribution of inheritance gifts can occur quickly and in many cases property is exempt from estate taxation. Trusts are typically used when estate value exceeds 0k. However, estates of lesser value can utilize strategies to keep certain types of property out of probate.
Estate planning will be different for each person. However, regardless of whether assets must undergo probate or protected by a trust a last will and testament must be executed. The Will is used to designate heirs or beneficiaries to receive specific property. Without a Will, estate assets are distributed according to state probate laws.
Estates without a legal Will are referred to as ‘intestate’, while those with a Will are ‘testate’. Intestate estates take longer to settle because additional duties must be performed. These include confirming a probate personal representative and locating rightful heirs.
Intestate inheritance is typically transferred to a surviving spouse and direct lineage heirs such as siblings, children, and parents. Anyone else who feels they are entitled to inheritance assets must submit a claim against the estate.
In order to avoid probate it is strongly recommended to consult with a probate lawyer or estate planning service provider. Some states exempt small estates from probate. In California, estates valued below 0k are considered small estates, while in Indiana the value is set at k. Values range from k to 0k, so it is important to determine estate value cutoff to determine which strategies are required.
Most states allow individuals to assign beneficiaries to receive proceeds in bank accounts and financial portfolios to avoid undergoing the probate process. This is a simple act that involves filling out a form provided by the financial institution.
Real estate can avoid probate by assigning property rights to beneficiaries. The type of document required varies by state. There are three different types of property assignments which include: Tenancy in Common, Tenants by the Entirety, and Joint Tenancy with Rights of Survivorship.
Motor vehicles can be transferred without undergoing probate by establishing a joint title. The process of transferring automobiles varies by state, so it is best to review policies via state Department of Motor Vehicle websites.
The only way to ensure inheritance gifts will be distributed according to your wishes is to establish a trust. However, if estate value does not warrant a trust, a last will and testament must be executed; otherwise property will be distributed via state laws.
Estate planners and probate attorneys can ease the estate planning process. These professionals offer guidance to ensure gifts are bequeathed to loved ones. They can offer invaluable advice regarding designating a personal representative, granting power of attorney rights, establishing a healthcare proxy, and explain all available estate protection options.
Everyone aged 18 and over should consider executing a legal Will. The cost is affordable and the process relatively simple. Taking steps to protect estate assets not only ensures valuable property will be given to loved ones, but also provides peace of mind.