Creating a Smoother Transition Through A Living Trust

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Creating a Smoother Transition Through A Living Trust

No one likes to think about death, let alone what will happen after they are gone. Nevertheless, planning your estate ahead of time is one of the most thoughtful gifts you can give your loved ones, and that begins with having a professionally drafted will in place.

Whether the estate in question is large or small, simple or complicated, that will is the cornerstone of estate planning. Even so, further work may be needed to make distributing your assets after death easier for your surviving loved ones.

Probate is the process by which the things you own will be distributed to your heirs, but you may be able to avoid it with some smart advance planning. The probate process can be slow, expensive, and cumbersome, and that is the last thing your loved ones will need when they are already grieving your loss.

There are a few things you can do to avoid, or at least speed up, the probate process. The exact procedures will depend on the specifics of your state, as state laws governing inheritances and estates can vary. Even if you already have a will in place, it makes sense to consult an attorney for further information on how to streamline the probate process or avoid it altogether.

Transfer on Death

When you look at a bank or brokerage statement, you may see the term TOD, and that simple phrase may make it possible for your heirs to avoid probate altogether. The TOD on those statements stands for transfer on death, and setting your accounts up that way helps ensure the funds will go directly to your heirs instead of being held up in probate.

Changing the designation on your bank and brokerage accounts to transfer automatically on death is generally a straightforward process. A simple visit to the local branch or some simple paperwork from your broker should be all it takes to streamline the transfer process.

Gift Your Assets While You Are Still Alive

The probate process applies only to the assets that were in your estate when you died, not to the items you gave away while you were still alive. Those items are not included in the inheritance, and that gives you a great opportunity to make your loved ones happy now, while you are still alive to see their smiles.

Giving away your assets before you die can reduce the size of your eventual estate, and that could lower the tax burden for your heirs. It may make sense to create a list of what you own, detailing how those items should be distributed and which of your loved ones should receive them.

There are some potential complications when gifting large assets, and it makes sense to consult an attorney before transferring things like your home, cars, and anything else of high value. Putting your home in a loved one’s name, for instance, could create problems if you need nursing home care down the line. A good estate planning attorney can help you work through these issues and determine the best path forward.

Set Up a Living Trust

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, but if your estate is a large one, you might also consider a living trust. This financial structure can have a host of benefits for your heirs, and if appropriate could save your loved ones a lot of money, time, and trouble.

You will definitely want to hire an attorney to set up and manage the living trust. This is not a DIY process, and the details can get quite complicated. An attorney can help you make sure a living trust is really appropriate, and they may be able to identify other, less complicated, options.

No matter what your age or health, it’s important to have an estate plan in place. You never know what the future might hold, and the last thing you want is for your grieving loved ones to face additional burdens after you are gone. The tips listed above may help your heirs avoid probate, so they can get on with living and spend less time meeting with your attorney.