If you’re like most people, you work hard to provide for your loved ones, and dream of retiring and then one day leaving behind a worthwhile legacy for your children and other heirs. Chances are, though, that there are times when you wonder whether you’ve worked hard enough to protect that legacy and ensure that it gets passed on as you intend. There’s good reason for that concern, since a lack of proper planning could leave your heirs with far less than you think. That’s why you need to plan ahead and think about how your estate could be impacted by the probate court in Indianapolis.
What Probate Does and Why It’s Not Always Necessary
If you haven’t thought about probate until now, it’s past time that you did. Without an effective estate plan in place, your estate could lose a good portion of its value as your assets go through a lengthy and cumbersome probate process. Between executor fees, attorney expenses, and costs associated with asset appraisal, tax preparation, and court fees, many probated estates can lose much of their value. And every expense that gets charged to your estate represents that much less that goes to your heirs.
None of that is to suggest that probate is a bad thing, of course. Quite the contrary. The fact is that the probate process is an invaluable element in our nation’s system for settling estates when people die. Without it, there would be far fewer protections for estates, and heirs would be at risk of having their inheritances stolen or otherwise denied. Probate helps to ensure that wills are valid and that decedent legacies are distributed as directed by either a will or state law. All of this is good for society and for families.
However, there are times when there is a better way. There are times when people want to preserve the full value of their estate to ensure that everything that they’ve worked for passes onto their heirs without excessive administration costs. If you find yourself in the position of worrying that too much of your wealth could be consumed by probate expenses, then you should begin to think about steps that can reduce that risk. Fortunately, you do have options.
These options are, in large measure, focused on one very simple fact about the probate process: it’s only necessary for assets that have no other way of being legally distributed to heirs. Such assets typically include wealth like a home that is in only your name, cars that have similar titling, and bank accounts that have no co-owners or transfer options. In fact, any assets that you own by yourself, and that have no way of being passed on without probate, could end up being subjected to that court-supervised process.
Protecting Asset Value by Avoiding Probate
Obviously, the best way to ensure that you avoid probate is to make sure that your assets are not subject to that process – and that means titling them in a way that ensures that they pass to your heirs and beneficiaries without court assistance. There are a number of commonly-used ways that this can be done:
- With homes, vehicles, bank accounts, and various other forms of property, you can use something known as joint tenancy with the right of survivorship. This type of ownership allows you to co-own property with the provision that the asset passes to the surviving owner when one of you dies. You can co-own assets with anyone you choose, though when such ownership involves you and a spouse it is known as tenancy by the entirety.
- If you have savings accounts, certificates of deposit, or both, you can use payable-on-death designations. This allows you to add a beneficiary name to the account much as you would with an insurance policy, while still maintaining total control over the assets. You don’t even have to commit to leaving anything in the account. If you do, however, the value of the account can be claimed by your designated beneficiary without ever going through probate.
- Transfer-on-death provisions can be used for stocks, bonds, vehicles, and real estate. These provisions allow you to name a beneficiary who then takes ownership of the assets when you pass away. Again, this option avoids the need for probate and ensures that your heirs receive the full value of the asset.
- The living trust can also be a great option for avoiding probate, and can be used for all of the assets cited above – and more. You need to have an attorney create a trust document, name yourself as trustee, designate a successor trustee to take charge after your death, and list beneficiaries who will receive the assets in the trust. The terms of the trust will be all that is needed to empower the trustee to transfer ownership of trust assets when you pass away.
Obviously, these are options that you should get help with before you implement any asset transfer plan, since it is easy to make simple mistakes that could have negative ramifications for your planning efforts. A competent estate planning attorney can provide you with the advice and counsel you need to ensure that your assets are titled in a way that helps to preserve their value when you die. In most instances, early planning can be essential to achieving your objectives.
At Frank & Kraft, Attorneys at Law, our estate planning and probate experts have the experience you need to help you plan ahead and avoid probate court in Indianapolis. We can work with you to evaluate your individual circumstances, analyze any existing planning efforts, and help you develop the more comprehensive strategy you need to ensure that your loved ones receive the inheritance that you want to provide. If you’re interested in learning more about how our team can assist you in your efforts to create a legacy worthy of your life’s work, contact us online today or call us at (317) 684-1100.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.