If you've been looking into drafting or updating your estate plan, you have likely come across the term "probate." Probate is a court-supervised process that sorts out and transfers a person's property upon their death. Typically the decedent's property is collected after death, certain debts, claims and taxes are paid from the estate, any disputes over assets are settled and eventually the property is distributed.
Probate does offer some benefits if you would like your property transferred in a public forum with court supervision. However, if you want more control over your assets you may wish to avoid probate. The process can be time-consuming, costly and vulnerable to error. In addition the cost of probating your estate may leave less for your heirs.
If you want to avoid probate there are several ways to do it.
One way to keep assets out of probate is to put them into a trust. A living trust allows you to transfer assets into the trust and name yourself as the trustee. This means you retain control of your assets and, since those assets will be in the name of your trust they will not go through probate. A living trust also allows you to set up successor trusts and provide instructions for handling those assets.
Trusts are a great option for avoiding probate of your assets but they are by no means the only one. Next week we'll discuss some additional estate planning vehicles that can help you ensure your family's financial future.
Source: Law and Daily Life, "How to Avoid Probate of Your Estate," Andrew Lu, March 31, 2013
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