Avoiding Probate | Estate Planning Information |
| The probating of a will permits a court of law to supervise the transfer of assets from the decedents to his heirs. A typical probate lasts about one year, with six months generally being a minimum time if everything proceeds according to schedule. Because of high attorney's fees, executor's commissions, and court costs, the often unwanted publicity, and the time delay involved in probating an estate, many people attempt to avoid probation administration. Some of the methods of avoidance are as follows: Joint Tenancy A form of title arrangement, usually between spouses. Title passes automatically to the surviving joint tenant. There may be income tax disadvantages to this arrangement and the joint tenancy must be dissolved after one tenant dies. Creditors of either joint tenant can attach the asset. It may also frustrate estate tax saving which are anticipated from carefully drafted wills and trusts. Totten Trust A method of passing savings accounts to heirs. Passbook accounts are held in trust for another. Typical wording would be: "John Doe, in trust for Johnny Doe." | Life Insurance The proceeds of life insurance are rarely subject to probate administration, unless the insured's estate is the beneficiary, or all of the named beneficiaries pre-decease the insured. Lifetime Gifts Even gifts made shortly prior to death will avoid probate. However, they may be brought back into the estate for death tax purposes. Also, gifts carry the donor's basis to the donee, whereas appreciated assets in the decedent's estate will generally get a new or "stepped-up" basis.Revocable Living Trust In many situations, the Revocable Living Trust is an effective method of avoiding probate. It has the additional advantage of providing management of the funds for the heirs for some time after the decedent's demise. Also, in the event the person setting up the Living Trust (also called an Inter-Vivos Trust) becomes mentally incompetent or otherwise incapacitated, a Successor Trustee can take over management of the estate. |
