You may already realize the importance of estate planning for ensuring that your assets are passed on to your beneficiaries. Unfortunately, you could make potential mistakes during this process that may lead to more of your estate going through probate.
What are those mistakes, and how can you avoid them?
What is probate?
Probate is a legal process that involves authenticating the will, appointing an executor, inventorying the assets, paying debts and taxes, and distributing the remaining assets to the beneficiaries.
Depending on the complexity of the estate, the probate process can take several months to years. Furthermore, probated wills are public records, which means anyone can view them. Therefore, most people prefer to keep as much of their estate out of probate as possible.
Here are some ways you can fail to keep your estate out of probate:
1. Relying on just a will
Although everybody should have a will, that won’t help your estate avoid probate. You need to explore other methods of wealth transfer to the next generation, such as direct beneficiary designations, gifts and trusts.
2. Not creating trusts
Creating a living trust, either revocable or non-revocable, allows you to move all your assets into the trust and designate a trustee and a beneficiary. After your death, the property goes directly to the beneficiary without going through probate.
3. Not setting up joint ownership
Establishing joint ownership of assets such as real estate or bank accounts will allow them to pass automatically to the surviving owner.
4. Failing to name beneficiaries
Naming beneficiaries on your life insurance and retirement accounts allows those assets to pass directly to them without going through the probate process.
Estate planning can be complex, and every person’s situation is unique. But with careful planning and assistance, you can keep your estate out of probate and save time and stress for your heirs.