People often hear about “simple solutions” that you can use to piece together your estate plan. They hear a few things about the drawbacks of probate and why you may want to avoid it, and they buy into these simplistic notions.
In this post, we will provide you with some information about the subject that should steer you away from courses of action that can yield negative consequences.
Why People Avoid Probate
First, we will briefly explain some of the negatives that go along with the probate process.
The inheritors do not receive anything while the court is probating the estate, and it will take about eight or nine months at minimum depending on the jurisdiction. This is one pitfall, and there are also a lot of expenses that accumulate during the process.
Anyone that wants to contest the estate can come forward during probate, and this can draw out an already lengthy procedure. Lastly, probate records are public, so anyone that is interested can find out how you decided to distribute your resources.
If you own your home, you could add an additional owner to the title or deed. This is called joint tenancy with right of survivorship.
The joint other tenant would become the sole owner of the property if you die first. This transfer would not be subject to probate.
That’s the good news, but the bad news is that the joint tenant would own half of the property as soon as you add them to the ownership document. If they run into trouble with the IRS, or if they are the target of a lawsuit, their half of the property would be in play.
This can also be an issue if the joint tenant was to go through a divorce. Plus, if you ever want to sell the property, you would need the cooperation of the joint tenant.
There are safer and more effective ways to facilitate the transfer of a home outside of probate.
Payable on Death Accounts
Banks and brokerages offer payable on death or transfer on death options. You can name a beneficiary when you open one of these accounts. They would not have access to the funds while you are living, so you would be safe on that level.
After your death, the beneficiary would present the death certificate to the institution. If everything is in order, the funds would be released to the beneficiary.
Some people go this route, and they tell the beneficiary to distribute the assets in a certain way. There is nothing about these verbal instructions that would be legally binding. Someone that is very compliant while you are alive may decide that you made the wrong decisions and take matters into their own hands.
Another problem with payable on death accounts is the lack of flexibility. You may be able to add more than one beneficiary, but some institutions may not allow you to split up the distribution percentages in different ways. Once again, there are better options available to you.
Attend a Free Webinar
We have some webinars coming up in the near future, and you can really build on your knowledge if you attend one of these sessions. The convenience level is off the chain, and there is no admission charge, so these are some golden opportunities.
You can visit our webinar page to see the dates. When you identify the session that works for you, follow the simple instructions to register.
Need Help Now?
If you already know that it is time to put an estate plan in place or adjust your existing plan, we can provide the assistance you need. In light of the dangers that are presented by the novel coronavirus, we are offering remote consultations, so you can set your health concerns aside.
You can schedule an appointment right now if you give us a call at 513-721-1513, but if you would rather send us a message, simply will out our contact form.
- What You Need to Know about Planning for Elder Care - March 21, 2023
- Can a Trust Be Contested? - March 16, 2023
- Ohio Medicaid Limits for 2023 - March 14, 2023