Probate is a court supervised process after someone dies and oversees the payment of the deceased person’s debts and the distribution of the remaining assets to the person’s heirs or persons named in their will.
What Is a Will and Do I Need One?
A will is a legal document that controls how your property will pass upon your death. It is generally a good idea to have a will so that you can designate who will receive your property and who will be in control and can administer and distribute your estate. If you do not have a will, state law determines who will receive your property. Understand that a will only deals with property that falls into your probatable estate. Property that you have set up to pass by beneficiary designation will not be controlled by your will.
My Spouse and I Have Children From Previous Marriages. How Can I Make Sure My Children Receive A Share of My Assets?
Some married couples make the mistake of drafting their wills such that all their property goes to the other spouse if the spouse survives. If the spouse does not survive then the property goes equally to both spouses’ children. A problem arises when one spouse dies and all their property goes to the survivor and then the survivor changes his or her will to give all the property to the survivor’s children. This has the unintended consequence of the deceased spouse’s children receiving nothing. A properly drafted will or trust can avoid this problem.
Is It A Good Idea to Set Up My Property to Pass By Beneficiary Designation and Avoid the Cost of a Will or Trust?
In some cases, simply designating beneficiaries would work. But this kind of estate plan fails to provide for contingencies with unintended consequences. If, for example, the pay on death beneficiary of your bank account dies before you do, the money in the account may go to someone you do not want. Another situation may be where the beneficiary is a minor or incapacitated person. A bank or insurance company or financial institution may require a court supervised guardianship or conservatorship. So, while is is ok to designate beneficiaries, it is almost always a good idea to also have a well drafted will or living trust.
I Want to Leave My House to My Heirs, But I Don’t Want Them To Have To Open A Probate. Is It A Good Idea To Deed The Property To My Heirs And Instruct Them To Record The Deed After I Die?
No. This type of estate planning (often called a “Pocket Deed”) can cause a lot of problems. Problems also arise if you place your heirs on title to the property as joint tenants. Whether a pocket deed or joint tenancy deed, you are making them co-owners of your property and you lose control. The property is exposed to the joint tenant’s debts, such as divorce, lawsuits and bankruptcy. If you try to sell your house or refinance it, you would have to get consent from the joint tenant. In addition, if the joint tenant becomes incapacitated, you may have to deal with the court concerning the joint tenant’s interest in your property.
A better way would be to sign and record a Beneficiary Deed. A beneficiary deed conveys the property to your heirs, but is only effective upon your death. So your property will not be subject to the debts of the person you want to leave it to. If you later change your mind and want to revoke the beneficiary deed, or you want it to go to someone else, you can do so. A beneficiary deed may or may not be the best way for you to transfer your property upon your death, so you should first discuss this with an experienced estate planning attorney.
What Is A Living Trust, How Does It Work and Is It Better Than Having A Will?
A Living Trust is a legal document that controls what happens to your property if you become incapacitated and after your die. Properly done, a Living Trust can prevent the need of a guardianship and can eliminate the need for a probate.
Think of a Living Trust as a toy box. You create the toy box when you create your Living Trust. You put your assets such as your house (toys) in the toy box. Inside the lid of the toy box is a list of instructions for what is to happen to your property if you become incapacitated and when you pass. The instructions will also designate who will be your guardian and who will be in control of your assets. Your particular circumstances evaluated by an experiences estate planning attorney before you decide whether a Living Trust is best for you.