Formulating an effective estate plan may involve utilizing fiduciary tools to help your family after your death. The more diverse your plan, the higher the likelihood that some of your assets may bypass probate. While probate itself is not bad, it is time-consuming and may prove costly to those waiting to inherit.
The size of your estate determines the court process it must follow. However, there are some options you may implement to aid those closest to you during a difficult time. Consider the possibility of passing some of your assets outside of a will.
Why is probate necessary?
Probate may seem scary. However, it is a relatively seamless process that serves a noble purpose. Probate ensures that your estate distributes to those you name. It gives you the power to choose your heirs. Probate also ensures your estate pays valid debts and claims.
What assets stay out of probate?
Not everything passes through court, which may prove beneficial if you want to pass assets quicker. It gives your family direct access to money rather than waiting for probate to conclude.
Joint assets/accounts
When you co-own property or accounts with someone else, the survivor maintains ownership.
Trust accounts
A trust account allows you to deposit property or cash for the benefit of another. The deposited items no longer belong to your estate and bypass probate.
Investment accounts
Investment and retirement accounts require you to appoint beneficiaries. These are the people who will inherit the account when you die. Tools that require beneficiaries, including life insurance policies, disburse directly to whomever you list.
Preparing your affairs for your death may seem morbid, but keeping your family in mind will make it easier. Understanding the process and your options makes estate planning less of a chore.