Probate comes from the Latin phrase “to prove,” and refers to the process of proving to a court that a last will and testament is valid. It is frequently a difficult and lengthy process, and in many cases can be quite expensive.
Below, we’ll outline three steps you can take to help your family avoid probate. Settling an estate is a difficult time as it is, so it’s worth it to take the right steps taking today to ensure it goes smoothly.
Probate Fees Can Add Up Quickly
The fees vary from state to state, but just to give you an idea, the typical probate costs on a $500,000 estate in California could range between $14,390 and $27,390. On the higher end, this could mean losing over 5% of your estate to probate fees, not to mention all the time attorneys and family members will have to spend seeing it through.1
Avoid Probate with These 3 Steps
In many cases you will likely need to apply some combination of the below approaches, so it is important to speak with your financial advisor and an estate attorney to know which options are right for you.
1) Set Up Beneficiaries on Your Investment Accounts
For IRAs, life insurance policies, annuities, and other retirement accounts you can set up beneficiaries so the intended recipients receive that money directly – no probate.
Where it gets tricky is for your taxable accounts and other taxable assets, but there are a few solutions. You can set up “Transfer on Death” designations or “Payable on Death” designations on those accounts, or you can register your accounts a specific way – such as setting it up as a “Joint Tenants with Rights of Survivorship.”
2) Create a Last Will and Testament with the Help of an Estate Attorney
Often times probate is necessary because the language in the will is either outdated or unclear – which could be because it was not created by a professional and updated every year. An estate attorney can review your current documents to help make sure everything is up to date. We’ve created an estate planning checklist to help you get started – go through it before you visit an estate attorney, so you’ll be better prepared.
3) Set up a Revocable Trust
By setting up a trust and naming your assets into the trust, the trust now owns the assets – not you. So if you choose to place all of your assets in the trust, it’s possible for the entirety of your estate to avoid probate, and you can also have the benefit of pre-determining how the assets are distributed to your heirs.2
Want someone to review these estate planning tips and your investment accounts with you? Call one of our Wealth Managers at 1-800-541-7774.
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