What is the Probate Process?
Probate is the process in which courts review your estate and determine how assets will be distributed or debts reconciled. If you have an enforceable will in place, they will follow your instructions, provided they are within Massachusetts law. If there is no will, the courts will follow state law, determine how your assets will be distributed, appoint guardians of minor children as necessary, and more.
The process can be lengthy, from months to even years to complete. During this time, your beneficiaries can’t access the assets that you have left them, as they need to wait until the probate process has been finalized. If you have dependents who rely on supplementary income, they may be put in an uncomfortable situation while the probate process is completed.
The other drawback to probate is the costs involved. Fees associated with lawyers, court fees, or executor fees can quickly add up. These costs can eat away at the assets you intended to bequeath to your beneficiaries, leaving them with less than you planned.
How to Avoid Probate
The good news is that the options to help you and your family avoid probate are many. There are several resources that you can review and utilize to help fulfill your needs and form a reasonable strategy for the future.
A trust is an excellent example of a resource that you can utilize to help protect your assets and your beneficiaries. Upon creating the trust, you transfer assets to the ownership of the trust, and upon your death, these assets transfer to the intended beneficiaries. You can create a revocable or irrevocable trust. Revocable trusts allow for more flexibility as you enter different chapters in your life. However, irrevocable trusts can help avoid unnecessary taxes in some cases and offer further protection of assets from creditors and more.
A life estate is another option that you may consider. Setting up a life estate allows you to maintain control of your assets while alive and benefit from them. The intended assets within the life estate are automatically transferred to the survivors listed upon your death rather than passing through probate.
Transfer on Death or Pay on Death
Another way to protect assets from probate is to set up accounts (or amend them) as transfer-on-death or pay-on-death accounts.
Assets such as investment accounts and alike can be set up so the joint tenant listed on the account obtains full ownership at the time of your death. These accounts are also not included in your estate, as another party now owns them.
Pay-on-death accounts are typically banking accounts. By adding pay-on-death provisions, you are instructing the bank on handling that account should you pass away. By providing instructions for the bank to establish full ownership in another party at the time of your death, these assets are also not included in your estate.
More Options for Avoiding Probate
In some cases, simply naming a beneficiary is enough to ensure that the asset is directly transferred to the intended party and safe from probate. For example, naming a beneficiary on a life insurance policy typically allows the beneficiary to gain access reasonably quickly following your death by providing proof to the life insurance company.
Joint accounts are another option, making the surviving tenant automatically the sole owner of the account. You can achieve this with a friend or family member through joint owners or with a spouse through tenancy by entirety. Tenancy by entirety means that your spouse automatically obtains ownership upon your death, and the asset only transfers to heirs after both you and your spouse have passed.
Transfer Assets to Another Party
Another option is transferring an asset to another party while you live. If you complete the transfer to another party before your death, these assets are no longer factored into your estate. Some may find it appealing to gift or sell assets to family members while they are still alive, as they can oversee the process and enjoy some of the satisfaction of seeing the transfer through. An aspect to keep in mind if transferring assets to another party is the tax implications to them. It may make more sense to place the asset in a trust that transfers to them upon your death.
It’s important to note that you must stay under the maximum gift allowance in a single year, however, if you are gifting rather than selling the assets. Consult your estate planning attorney to ensure you handle asset gifts appropriately to avoid unnecessary taxes.
Helping You Navigate Your Legacy
We understand that your legacy is important to you. After all, you have put a life’s worth of effort into the estate you created. It’s essential to ensure that unnecessary taxes aren’t eating up what you intend to transfer to your loved ones or other organizations you care about.
Our team has vast experience and knowledge in estate planning. We have several years of working with clients to help them navigate the process and help it become less overwhelming. With so many options, some clients are hesitant to enter the process. That’s what we are here for: to help you weed out the options that don’t fit your needs and focus on the resources that do.
Contact our office today at (781) 531-8673 to learn how we can help you and your family plan for your future. In many ways, it’s the most caring thing you can do for your loved ones, to care for them even after you are gone.
We look forward to serving you and your family.