It’s easy to say, “I’m going to get my estate plan done this year.” But where to start?
First consider your assets, their value, and who you’d like to leave them to. The goal is to get the assets to your beneficiaries quickly, efficiently, economically and to avoid probate. If you have a very small estate, less than $184,500.00 and no real estate, an affidavit procedure will work. A larger estate will require probate.
Probate is the court supervised administration of your estate. Probate is expensive, time-consuming, and public. If your estate is worth half a million dollars, your estate will pay statutory probate fees of $13,000 to the executor and $13,000 to the attorney; $930 in court filing fees; probate referee’s fees, for this example, of $500; $225 to publish in the newspaper, for a total of $27,730.00 – money that your beneficiaries will not receive.
Certain assets, such as life insurance, IRA’s, retirement plans, and POD accounts pass by beneficiary designation. Designate your beneficiaries and you are done.
If you own a home, you could avoid probate by titling it in joint tenancy. Joint tenancy property, such as home or joint bank account, passes to the other joint tenant by operation of law. Joint tenancy will work to pass the asset to the surviving joint tenant. However, joint tenancy is not advisable if you have multiple children. Your assets could become subject to the child’s creditors. If you own a home, a trust is necessary to transfer your property to your beneficiaries privately and efficiently, without the delay and expense of probate.
To avoid probate, you must have assets that pass by beneficiary designation or by operation of law or a trust.