If you’ve ever endured the lengthy probate process after a loved one’s passing, then chances are you have some idea of just how time-consuming and frustrating it can be. Often times, families have to wait many months for the court-supervised process to complete, with beneficiaries forced to wait longer than they should to receive any inheritance that might be due. If you have assets that you want to quickly get to your surviving family members when you die, then you may want to look at estate planning strategies that can help you avoid probate in Indianapolis.
What is Probate?
Probate is a legal process used to distribute your assets to your heirs when you pass away. This court-supervised process can be utilized to distribute any assets that are in your sole name. It does not apply to assets that are jointly owned by you and another party, or instances in which you have established direct transfer to a beneficiary upon death. So, for example, ownership of a joint bank account would automatically transfer to the other owner or owners of the account when you die, but an account over which you exercised sole ownership would not.
Why Would You Need to Avoid It?
While probate is a necessary process for ensuring that your last wishes are respected in accordance with the law, it can be a burden in many instances. If you have a spouse or children who will need to rely on your state for their financial wellbeing, you certainly don’t want them to have to wait for months before they receive the financial support they need. Moreover, probate can be a costly process that can reduce the actual value of an estate by as much as 5 or 6% by the time everything is settled. Clearly, that is money that would better serve your surviving family’s interests rather than those of the state and the attorneys involved.
How Can an Estate Plan Help?
A well-constructed estate plan can help in that regard, and ensure that the wealth you worked so hard to accumulate throughout your life is not held up or depleted in probate when you die. Estate plans can not only provide a clear, probate-free ownership transfer process when you die, but can help in areas like taxation as well. And if you suspect that you may require nursing home care or other assisted living accommodations as you get older, a good estate plan can assist you in managing your assets in a way that may qualify you for Medicaid assistance when you need it most.
That last benefit can be an important one for many Americans – especially those whose overall wealth might be enough to provide family members with some needed benefits, but still wouldn’t be enough to even come close to paying for the high cost nursing home long-term care. With assisted living costs near record-levels, few can afford any type of lengthy stay in a nursing home without the benefit of subsidy programs like Medicaid.
Essential Documents You Need
An estate plan is basically a collection of legal documents and strategies that are designed to manage your assets during life, distribute them at death, and – if you’ve included a will as well – ensure that your final wishes are known and followed. While there are any number of component parts that can be included within your own individualized plan, experts tend to agree that there are several that should be present in every case. These include documents to provide for power of attorney to manage your financial and health care decisions, a living will, and a living trust.
- Durable Financial Power of Attorney: This document enables you to empower another person to act as your agent in the event that you can no longer manage your own affairs. The standard version goes into effect at signing, providing legal authority to the designee immediately. Because most people want to maintain their own authority until they become incapacitated, it is common to use a Springing Power of Attorney that only goes into effect when you lose your decision-making capacity.
Your designation agent will have all the legal authority needed to manage your financial affairs. That includes making payments from your accounts, buying properties, selling assets, and other money-related concerns. Because this involves so much authority over your finances, it is crucial that you select a trusted individual to fulfill the role
- Durable Heath Care Power of Attorney: Like the Financial Power of Attorney, the Health Care Power of Attorney provides your trusted agent with all the power needed to make decisions about your health care needs. It is a good idea, therefore, to include specific instructions about certain care possibilities, to ensure that your agent knows what your wishes might be in the event that you lose the capacity to express your care preferences.
- Living Will: This document has become more common in recent years, and is basically used to declare your intentions with respect to the use of life support technologies in the even that you have a terminal condition. Many people use their Living Wills to ensure that they do not suffer needlessly, or to prevent medical costs from destroying their estates.
- Living Trust: A Living Trust – either revocable or irrevocable – is one of the most common options used by people who want to avoid probate. A trust is created, and you then transfer ownership of all of your assets into that trust. You also select a successor trustee to manage the distribution of those assets when you die, in accordance with your expressed wishes and the provisions of the trust itself. This keeps those assets out of probate and usually results in quicker and less costly distribution to beneficiaries.
Though the probate process is necessary for those who leave only a Last Will and Testament, as well as instances where decedents die intestate, many people still like to avoid the delays and costs associated with its administration. The good news is that an Indianapolis estate planning attorney can help you with strategies that can avoid the need for probate. To find out how our firm can assist you in developing the estate plan you need, contact us today.
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.