Long Island Elder Law & Estate Planning

probate 4If you are just getting started trying to gather information about estate planning, you may hear the term “probate avoidance” and wonder what it is all about. First off, to know why you might want to avoid probate, you have to know exactly what it is.

Probate can be defined as the legal process of estate administration. This involves the probate court examining the will to determine its validity and then acting as a supervising entity as the wishes of the deceased are carried out in a hands-on manner by the executor or personal representative.

When you hear the above, you may think, okay, that sounds pretty innocuous, so why would I want to avoid it? There are a number of reasons why, and one of them is the fact that the process can become lengthy. Even if it is a simple case it is going to take nine months or so at minimum.

In other cases, it can take a very long time. For example, the Anna Nicole Smith matter involving the Marshall estate was finally resolved some 15 years after the legal wrangling began. It is important to realize that the heirs to the estate do not receive anything until the estate has been probated and closed.

There are many different probate avoidance strategies that can be implemented, and the optimal combination is going to vary on a case-by-case basis. One very simple and straightforward way to transfer assets outside of the process of probate is by creating payable on death or transfer on death accounts.

You can open one of these accounts at your bank, and many brokerages offer them as well. The way that it works is that you simply add a beneficiary when you open the account. When you pass away, your beneficiary assumes ownership of the funds, and this transfer takes place quickly and efficiently outside of the process of probate.

It should be noted that there are limitations that go along with this approach. There is a safer, more comprehensive way to proceed, and we will look at in another section.

Joint Tenancy

Another way to enable a probate-free property transfer would be to add a joint tenant to the title or deed of your home. This is essentially a co-owner. After you pass away, the joint tenant that is named on the ownership document would become the sole owner of the property, and the probate court would not be involved in the transfer.

This may sound like a great solution on the surface, but there are some potential drawbacks to take into consideration. For example, let’s say that you name a joint tenant, and you instruct the person to sell the house after you pass away and distribute the resources among multiple family members in a certain manner. The individual in question would not be legally required to follow these verbal instructions.

There is also the matter of potential legal actions or tax liens. If you add a joint tenant, this individual would own half of the property right away. As a result, if there is a legal judgment against the person that you added to your deed, his or her portion of the home could be attached.

Revocable Living Trusts

The best way to get assets into the hands of your loved ones outside of the troublesome probate process is through the utilization of a revocable living trust as the centerpiece of your estate plan.

When you establish a revocable living trust, you can act as the trustee and beneficiary while you are alive and well. You maintain complete control of the trust, and you have the ability to dissolve it entirely if you ever choose to do so.

In the trust declaration, you name a trustee to succeed you after you pass away, and this person or entity could also be empowered to administer the trust if you become incapacitated. You would name your heirs as the successor beneficiaries.

When the time comes, the successor trustee would distribute assets to the beneficiaries in accordance with your wishes as stated in the document. The probate court would not be a factor, so all of the pitfalls of the unwieldy process would be avoided.

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About Eghrari Wealth Training Law Firm

Mark S. Eghrari is an attorney in private practice in Smithtown, New York. He has been in practice since 1988. Mark S. Eghrari provides extensive estate and tax planning services to individuals and businesses. Mr. Eghrari’s primary focus is helping clients avoid probate, minimize or eliminate Federal and State Estate taxes and protect their assets from the high cost of nursing care, if they become ill.