No one likes to think about death, let alone what will happen after they go. Still, planning your estate ahead of time is one of the most thoughtful gifts you can give your loved ones, and that starts with having a professionally drafted will.
Whether the estate is large or small, simple or complicated, that will is the cornerstone of estate planning. Yet, more work may be needed to make distributing your assets after death easier for your survivors.
Probate is the process of distributing your things to your heirs, but you may be able to avoid it with some smart advance planning. Probate can be slow, expensive, and cumbersome, and that is the last thing your loved ones need when grieving your loss.
There are steps you can take to avoid, or at least speed up, the probate process. These procedures depend on the specifics of your state, as state laws governing inheritances and estates can vary. Even if you already have a will, consulting an attorney for more information on how to streamline the probate process or avoid it altogether is wise.
You may see the term TOD on a bank or brokerage statement, which could make it possible for your heirs to bypass probate. TOD stands for transfer on death and setting up your accounts this way ensures the funds will go directly to your heirs. Changing the designation on your accounts to transfer on death is usually simple; a visit to the local branch or some paperwork from your broker should do the trick.
You can make your loved ones happy now, while still alive to see their smiles, by giving away your assets before you die. This can reduce the size of your eventual estate and lower the tax burden for your heirs.
To ensure a smooth transfer, create a list of what you own and detail how those items should be distributed. If you‘re gifting large assets, consult an attorney first to avoid potential complications. A good estate planning attorney can help you work through these issues and determine the best path forward. The probate process only applies to the assets in your estate when you died, not to the items you gave away while alive.
Giving away small items while you are still alive and setting up your bank and brokerage accounts to transfer automatically on death are relatively simple actions to take. However, if your estate is a large one, you may consider a living trust, which can have a host of benefits for your heirs and potentially save them money, time, and trouble.
Hiring an attorney to set up and manage the living trust is recommended, as the details can get complicated. They can also help you determine if a living trust is really appropriate and identify other, less complicated, options.
No matter your age or health, it is important to have an estate plan in place, as you never know what the future might hold. This may help your heirs avoid probate, allowing them to move on with their lives and spend less time meeting with your attorney.