One of the factors that people often overlook when they are not completely informed about estate planning is the impact that probate can have after you pass away.
You may assume that the executor that you name in your last will can distribute assets to your loved ones immediately after you die. In fact, this is not the case.
The estate must be probated before the inheritors receive their bequests. This process takes place under the supervision of the probate court.
We should point out the fact that some asset transfers organically take place outside of the probate process. If you have insurance policies on your life, the beneficiaries would receive the proceeds from the insurance companies directly, and probate would not be a factor.
When you open a bank or brokerage account, you could name a beneficiary. This is called a payable on death or transfer on death account. After you die, the beneficiary inherits anything that may be left in the account. This type of transfer would not be subject to probate.
It is also possible to name a co-owner to property that you have in your personal possession. This person would become a joint tenant. The joint tenant would immediately own half of the property, even while you are living.
After your death, the joint tenant would assume full ownership of the property, and probate would not be a factor.
If you were to create and fund a revocable living trust, the trustee that you choose could distribute assets to the beneficiaries outside of probate after your passing.
There are other types of trusts that would also facilitate probate avoidance.
Cost of Probate
There are a number of different expenses that can accumulate during the probate process, and this is one of the reasons why some people take proactive steps to avoid it. The court will charge a filing fee, and the executor is entitled to payment for his or her time and trouble.
Because probate is a legal process, a probate attorney will typically be engaged. Final debts must be paid during probate, including taxes. As a result, the executor may bring in an accountant.
There can also be appraisal fees, liquidation charges, and other miscellaneous expenses. All in all, probate expenses can consume a noticeable portion of the estate.
Probate Report
You should certainly have a thorough understanding of the probate process if you want to make sound estate planning decisions. If you would like to educate yourself, we have a valuable resource that you can access through this website.
Our firm has compiled a series of special reports, and one of the reports takes an in-depth look at the probate process.
To access your copy, click this link: Grand Forks ND Probate Report.
To learn more, please download our free Probate Always Required in North Dakota here.
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