Let’s examine the steps involved in the probate process:
- One’s Will is presented to the Probate Court (sometimes referred to as Surrogate Court) and automatically becomes “public” record
- The Estate Executor will conduct an inventory of all assets
- In some cases an appraisal will be necessary
- All remaining debts/taxes are paid-in-full
- Probate Court must validate your Will
- The estate in question will be responsible to satisfy all legal costs now being generated i.e., court costs, lawyer’s and executors’ fees
- After which all of the above have been addressed the balance of your estate is now available for distribution to its named heirs.
Sometimes we are in a position to name a specific individual outright on a legal document as the intended recipient of the underlying asset. Therefore, we might be interested in what is in some circles referred to as the, “Poor Man’s Trust,” or “Poor Woman’s Trust” for that matter. This planning technique requires that one name a Designated Beneficiary (ies) on documents such as Life Insurance Policies, Annuities, Retirement Accounts, Bank Accounts, and Securities such as Stocks & Bonds. Initially, the designated individual has no present interest in your account, but receives it automatically upon your death. It’s recommended that you re-visit all of these documents periodically and confirm that the Designated Beneficiaries are still who you wish them to be, and that the inheritance intended remains fully funded for its original purposes.
Throughout your lifetime your financial assets will most likely always changing – increasing, decreasing, and yes, sometimes even disappearing. Even those that you wish to inherit something from your estate may die before you. This could throw a wrench into your plans if you utilize titling your assets as, Joint Tenancy with the Right to Survivorship (JTWROS). In this scenario, the surviving joint tenant(s) own the deceased joint tenant’s portion of the property upon death of one joint tenant. Generally speaking, this method is usually not favored by lawyers – and for good reasons. Possibly at some future time you might feel that person that you established the joint tenancy with should get a larger or smaller share of your estate. By definition JTWROS is always an equal ownership amongst all named joint tenants. Another real danger is that you subject your assets to the creditors, spouses and business partners of that person you put on the title. Even more frightening is that you lose the authority to refinance your home, liquidate government bonds, and even cash out your certificate of deposit unless your joint tenant accompanies you to the bank or titling company and signs willingly. As my father instilled in me early in life, “Measure twice and cut once.”
In this article we’ve covered just a few of the “economical” techniques that you could utilize to lighten the load of the probate process. To re-cap, you can give it all away, name a Designated Beneficiary and/or be sure to address the correct titling of your assets so that your well intended wishes are carried out per your Last Will & Testament. In terms of affordability, these methods are some of the most efficient and frugal now available.
For those that have both the wherewithal and inclination I’d like to offer one additional possibility, the Living Trust - legalzoom™ shares with us that, “A living trust is a trust that is created during your lifetime. In other words, while you are still alive, you transfer title to your property from your name to that of the trustee of the living trust. You can use the trust to gather your property under one document, so that the property is distributed efficiently after your death.” Although you no longer have legal title to your property transferred into the Trust, you could still have a good deal of control over the Trust – especially if you name yourself as the Trustee. The creation of a Living Trust will facilitate the distribution of the Trust (property), and as such the avoidance for those assets to go through the probate process. To be clear, it is the “funding, of the Trust that avoids probate, and not the Trust itself.
The mere fact alone that the probate process mandates that the court will now decide how your assets will be distributed should be enough to get you off the stick and act – and act now. before it’s too late. There are remedies to help you, but they require your immediate attention. Putting these off until tomorrow is easier said than done, and only if you’re still among the living tomorrow.
Note: The time estimates above are for illustrative purposes only and will not necessarily apply in every situation since specifics of the probate process differ with every estate.
¹ Dying intestate is when a decedent does not leave a legally binding will. The estate of an individual who dies intestate is distributed according to the State’s intestacy laws where the decedent was domiciled and/or where the decedent owned real property. Intestacy statutes basically "create" a will for the decedent.
Author’s Note: Please consult with your CFP®, CPA and/or Estate/Tax/Eldercare Attorney when discussing your financial needs and developing the appropriate personal/business financial plan.
John Politi is Executive Director of the Jewelers for Veterans Foundation, a 501(c)(3) Non-Profit, dedicated to connecting US Military Veterans with training & employment in the jewelry industry – www.jewelersforveterans.org. He holds an MBA in Financial Management, MBA-Advanced Certificate in Health Care Management, Series 65 (Investment Advisor Representative), and successfully completed the required CFP® Financial Planning Educational Program. John would enjoy receiving your feedback and/or questions in regard to your Financial Planning activities, especially, Defined Contribution Programs (401K), 403b, 457, and Pre/Post Retirement Planning – both personal and business. He enjoys active membership with the Financial Planning Association-Greater Hudson Valley, NY, serving on their Pro Bono Committee, as well being a member of ACHE, Healthcare Leaders of NY Chapter, and the 24KT Club of New York. John welcomes your input and can be contacted at, firstname.lastname@example.org , or telephone 212.600.2475.