Many of my estate planning clients are surprised to find out that a properly executed Will does not avoid probate. In fact signing a Will gives your entire estate a first class ticket to the slow and costly probate court after you die. If you pass without a Will the situation is even worse because the estate will have to be administered in probate court as an intestate estate which will only further complicate matters. In Florida the probate process can cost thousands of dollars in legal fees and in some cases may take years to complete, meanwhile your family may not have access to your assets until the probate is complete.
The good news is that with careful planning probate can be avoided. By utilizing the following techniques your assets will automatically pass to your heirs without probate.
1. Joint Ownership. Assets owned jointly with survivorship rights will automatically pass to the surviving owner at death. Examples of such assets include a home owned by a husband and wife as tenants by entireties or a parcel of real estate owned by non married individuals as joint tenants with rights of survivorship.
2. Pay On Death Designations. Accounts which designate a pay-on-death beneficiary will automatically pass to the beneficiary on the death of the account owners. An example of this type of account is a bank Certificate of Deposit (CD) which lists a pay-on-death beneficiary.
3. Contracts with Death Benefits. Financial contracts which pay a death benefit to a designated beneficiary are not subject to probate. Examples of such contracts include Life Insurance and Annuities.
4. Retirement Accounts. Retirement accounts which designate a death beneficiary avoid probate. Examples of such accounts include Individual Retirement Accounts (IRA) and 401Ks.
5. Trusts. Assets held in a properly executed trust will not be subject to probate. One of the pitfalls of utilizing the techniques listed in 1-4 above is that if the person you designate as your beneficiary fails to survive you then the subject account or asset may end up back in probate. A trust allows you to designate a list of contingent beneficiaries who will inherit your estate in the event that your original beneficiaries fail to survive you thus ensuring that probate will always be avoided.
Avoiding probate requires careful planning utilizing a variety of legal techniques. It is imperative that you have an experienced lawyer help you plan your estate.
For more information about estate planning or how to avoid probate please contact attorney Matthew J. Monaghan.
To read more about other estate planning techniques, click here.