Probate is a necessary requirement used to validate decedents’ last will and testament and distribute inheritance property to named beneficiaries. Probated estates are managed by an estate executor who is responsible for taking inventory of assets, obtaining property appraisals, paying outstanding debts, and distributing inheritance assets.

Probate usually requires three to six months to complete. If family disputes arise or heirs contest the Will, the probate process can last for years and bankrupt the estate with legal fees and court costs. Heirs who contest decedent wills are responsible for their legal fees. If a probate judge rules in favor of the plaintiff, the estate is responsible for reimbursement of legal expenses.

Inheritance asset protection strategies can be implemented to avoid probate. One of the most common strategies is to establish a trust. Property and assets transferred to trusts are not considered part of the estate and thereby avoid probate. Assets held in a trust are also exempt from inheritance taxes.

Trusts are overseen by an appointed Trustee. Individuals can designate their self as Trustee and designate a second Trustee to administer the estate in the event of their death. Legal title to property is transferred to the Trustee and held in the trust.

Trusts are typically reserved for estates valued over $100,000. However, strategies are available to protect assets for smaller estates. These include establishing transfer on death (TOD) and payable on death (POD) beneficiaries, as well as gifting.

TOD beneficiaries can be established for retirement, 401k, and financial investment accounts. Proceeds can be divided amongst multiple beneficiaries or transferred to one individual. For example, if you have three children and one sibling, you could arrange for each to receive 25-percent of the funds, or you could give 30-percent to each child and 10-percent to your sibling. With TOD, you control how much each beneficiary will receive. Beneficiaries do not have access to accounts until they have provided proof of entitlement.

Transfer-on-death can also be used to transfer titled property such as real estate and automobiles. Not all states allow TOD assignments for motor vehicles. If your state does not permit TOD, you can apply for a joint title and add the recipients’ name. Upon death, the beneficiary must take the title and death certificate to the Department of Motor Vehicles and transfer the vehicle into their name.

Some people gift their property while they are still alive to avoid probate. This strategy is often used by individuals who have been diagnosed with terminal illness. The elderly also prefer gifting inheritance property to loved ones; particularly when they move into an assisted living facility or nursing home.

Gifted property reduces the size and value of the estate and lowers probate costs. Gifting also ensures your loved ones will receive the inheritance you want them to have. Estate planning experts claim 80-percent of beneficiaries never receive a dime of inheritance when estates are probated. The IRS permits gifting of $12,000 per year to individuals and $20,000 per year to married couples. When gifting higher amounts, recipients must submit a federal gift tax return.

Probate is a time-consuming and costly task that can be avoided by engaging in estate planning. It is not difficult and only requires a few hours of time. Taking time to establish a plan now will save your loved ones time and money and reduce their stress during a difficult time.

Author Bio: Simon Volkov is an investor and probate liquidator who offers solutions to heirs needing cash for inheritance property held in probate. If you are an estate executor or beneficiary who needs to sell probate assets, visit www.SimonVolkov.com to arrange a complimentary consultation.

Category: Family Concerns
Keywords: probate,avoid probate,estate planning,inheritance asset protection,last will,trusts,inheritance