Don’t Let Probate Cause Problems for Your Family
Most Americans won’t have to worry about federal estate taxes, assuming that the $5 million exemption recently passed by Congress is not reduced in the future. But other challenges can affect a person’s beneficiaries, including probate costs. Probate is the word used to describe the administration of a decedent’s estate, which can be a long, complex and sometimes expensive procedure. There are steps you can take, however, to keep probate short and cheap:
Where practical, it can be satisfying to make lifetime gifts to your beneficiaries, rather than leave them assets at death. Note: People who “accelerate” bequests for our benefit additionally can enjoy income tax savings and the pleasure of seeing their generosity at work right now. Keep in mind that you can make gifts and keep lifetime payments for yourself or someone else, through a charitable remainder trust or gift annuity – with excellent tax results. Call us if you would like to learn more about these opportunities.
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- Make a will, and keep it up to date. Consider relieving your executor of the necessity of posting bond, and ask if the person you name is willing to serve without fee. Delays and expense can also be avoided if your attorney drafts a will that equips your executor with important powers – such as the ability to sell estate assets or make certain elections – so that hearings to seek court approvals won’t be needed.
- Ask your adviser if it is feasible to reduce your probate estate so as to qualify for “small estate” treatment that will shorten probate or avoid it completely. If your probate estate is small enough, beneficiaries may simply present signed affidavits to receive certain assets, depending on state law.
- Consider establishing a revocable living trust that will transfer trust assets to your beneficiaries outside the probate system. If you do set up a revocable living trust, be sure to change the title to your assets – real estate, investments, personal property, etc. – into the name of the trust. As you acquire new assets, ensure that the trust takes title, not you personally.
- Investigate other non-probate transfer arrangements such as P.O.D. accounts (most savings and checking arrangements, including CDs), T.O.D. accounts for securities held with a broker, life insurance, joint ownership with right of survival, community property with right of survivorship (community property states only), and lifetime gifts in lieu of bequests.
Where practical, it can be satisfying to make lifetime gifts to your beneficiaries, rather than leave them assets at death. Note: People who “accelerate” bequests for our benefit additionally can enjoy income tax savings and the pleasure of seeing their generosity at work right now. Keep in mind that you can make gifts and keep lifetime payments for yourself or someone else, through a charitable remainder trust or gift annuity – with excellent tax results. Call us if you would like to learn more about these opportunities.
Copyright © by R&R Newkirk. All rights reserved.
