Some people assume that the executor of a will can transfer the assets to the beneficiaries in short order after the passing of the testator. In fact, this is not the way it works.
The executor would be required to admit the will to probate. This is a legal proceeding that takes place under the supervision of the probate court in the county of the decedent.
In addition to transfers that are facilitated through the terms of a will, if there are no estate planning documents at all, this court would supervise during the estate administration process.
Probate serves a purpose, because creditors are given the opportunity to come forward seeking satisfaction before the estate is transferred to the heirs. It also opens a window of opportunity for anyone that wants to challenge the validity of the will.
This being stated, there are some things about this process that you should understand before you make any final estate planning decisions.
Probate expenses can be considerable.
There are a number of expenses that accumulate during probate, and the red ink will reduce the inheritances that will ultimately be received by the beneficiaries.
The executor is entitled to payment for their time and effort, and final taxes must be paid, so an accountant may be engaged. A probate lawyer will help guide the executor through the process, and these professionals charge fees for their services.
Appraisal and liquidation charges will enter the picture, and a filing fee must be paid. And of course, final taxes must be taken care of while the estate is being probated.
It is a time-consuming process.
Most people would want their loved ones to receive their inheritances in a timely manner, but this does not happen with an estate that is being probated. No inheritances are distributed while the estate is going through probate, and it will usually take a minimum of nine months.
Probate records are available to the general public.
You probably value your privacy when you are making financial decisions, and this would extend to your final affairs. Confidentiality will be especially important if you have made some inheritance planning choices that will not sit well with certain interested parties.
Probate records are available to any interested party that wants to access them, so prying eyes can dig into the details and find out how you decided to distribute your resources.
You can avoid probate.
All of the above is not very encouraging, but we can now move on to the good news. You can proactively implement a probate avoidance strategy, and this can be done through the utilization of a revocable living trust.
As the name would indicate, you can revoke the trust at any time after you create it, so there are no risks involved. Plus, you would act as the trustee while you are alive and well, so you would control the assets in every way.
You would name a successor trustee to step into the role after your passing, and they can also be empowered to manage the trust in the event of your incapacity. This can be a family member or someone else that you know personally, and you can alternately use a professional fiduciary.
After your passing, the trustee would follow the instructions that you leave with regard to the way you want the assets to be distributed to the heirs. If you choose to do so, you can instruct the trustee to distribute limited assets on an incremental basis to prevent reckless spending.
Regardless of the way the assets are distributed, the probate court would not be involved, so the negatives that we described would be completely avoided.
We can help you put the plan in place!
A living trust can be the ideal estate plan centerpiece for a wide range of people, but there are many tools in the toolkit. The perfect approach will depend on the circumstances, and this is why you should discuss your unique situation with a licensed Memphis, TN estate planning attorney.
If you are ready to get started, you can schedule a consultation if you call us at 212-973-0100, and you can alternately use our contact form to send us a message.
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