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THE common perception about probate could be especially daunting- costly, long, emotionally, physically and mentally draining at some point.
Probate is the judicial process that distributes a person’s assets after they die. It makes transferring property simpler by removing any title issues that could arise if you want to sell whatever you’ve been left.
A probate court usually takes an inventory of the deceased’s assets and liabilities and distributes those assets after paying any outstanding debts. In most states, probate is required if there’s a will (testate), or if there is no will (intestate).
If you want to avoid probate entirely to make things easier for your loved ones when you die, you need to have an estate plan, whether as a whole or as needed. An estate plan usually includes a Will, Living Trust, Advanced Healthcare Directive, and Power of Attorney. Depending on your circumstances, you might need or not need all of these documents.
Joint tenancy and will
Joint tenancy allows two people to have equal ownership over property – most commonly over real estate or bank accounts. Upon your death, the remaining person will become the property’s sole owner. You must take care to ensure that a joint tenancy is right for your property. In general, joint tenancy is usually best between spouses because of tax issues. Still, you can create a joint tenancy with anyone.
If you create a joint tenancy with one child to avoid probate but want to distribute your assets evenly between all your children, you can’t do that with joint tenancy – even if you have a will.
Additionally, transferring property of any significant value could have tax ramifications (either estate, gift or capital gains) that you must analyze before executing any transfer. Even if your property is owned by a joint tenancy, you still need a will in case your joint tenant dies with you.
Even if you’re able to protect all of your assets from probate, you may still need a will. For example, if you have children, you will need a will to establish guardianship for your minor children.
Revocable living trust
You can also avoid probate by distributing your assets through a revocable living trust. With it, you create a legal entity that can own property. You avoid probate because the assets are not yours; they belong to the trust.
To create a revocable living trust you must name a trustee and a beneficiary. You can name yourself, a bank or a trust company as the trustee. The beneficiary of the trust is the person you want to receive the assets. After creating the trust, you must fund it. Take care to treat the assets as the trustee’s; they’re no longer yours, although you may still have unrestricted access to the assets.
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