Probate is the process by which the last Will and the testament of the concerned individual are legalized by the probate court. The same process also includes verification of the executor or administrator who will take care of the assets. The executor is appointed by the deceased individual in his Will while the administrator is chosen by the probate court. The court weighs a number of factors before selecting a suitable person as the administrator. The documents that need to be submitted to the court vary from state to state. Most of the estates have to undergo this process otherwise the executor is not authorized to distribute the assets among the beneficiaries. The process has numerous advantages. The heirs are safeguarded as the court supervises the whole process. There is no disparity regarding the title of the property. The claims of the creditors can be settled as well. All the transfer of properties is done in the court publicly so that there is no opportunity for any future disagreements or future claims. However the process is quite expensive. Generally probate costs can reach up to 4% to 6% of the total estate value. There are also the expenses of the executor or the administrator. The longer the process takes, the more expensive the process becomes. Normally the least time taken from a probate case is around eight months but it is not uncommon for a case to take up to two years. At the end of the term, your heirs will not be very happy to see the amount left after various expenses and deductions from the funds. If you stay in California and you want to minimize your costs then it is advisable that you hire an LA Probate Law expert who will guide you. His knowledge can help you to bring significant changes to your estate plans so that you save money later. Also all kinds of modifications may not be suitable for you. Sit with him and understand what alternations will be effective in your case.
Probate fees can be significantly reduced if you designate a beneficiary for your registered retirement savings plans and registered retirement income fund assets. If you have insurance policies and you have selected a nominee then also the funds will pass directly to the beneficiaries without going through the probate process. When you name beneficiaries of such policies, you generally categorize these assets as those assets which do not belong to your estate and thus save them from the process. Be a little careful when you name the beneficiaries of the RRSPs. In the event of your death, a large sum of money as income tax may be deducted from the value of your estate based on the market value of the RRSP. However this money can be saved if the beneficiary is the spouse, financially dependent child, or a grandchild under 18 years of age or is a common law partner. LA Probate Law Professionals will advise you to not name your estate as a beneficiary as it will attract a large sum as taxes.
Many times couples hold account or properties under Joint ownership with right of survival. In such cases, these properties pass on to the other joint owner directly when the primary owner of the properties dies. In some states, only producing a death certificate of the owner gives you the right over his properties for a joint ownership clause. Joint Ownership of vehicles also saves probate fees. But make sure you research about LA Probate Law before taking any step. Also the probate fee is reduced on a particular property if you do not own it at the time of your death. Be aware of the fact that the properties you gift to save probate fees will be charged a gift tax. So consider all the various costs related to your property and then go for transfer of ownership of your assets.
Multiple wills can save the day:
In some states you can establish multiple wills. The state may require probate for assets like bank accounts, real estate or shares. This can be considered under a particular will. A probate process may not be required for debt obligations of private companies or pension plans and so they can be included in a separate will. Annuities are also a great way to cut down probate costs. At the time of your death, the probate process will be carried out only for those assets that can be probated. However the Wills and the supporting documents must be properly submitted so that there is no confusion regarding the titling of properties. A LA Probate Law professional can help you with the exact wording and correct format of the documents.
Trusts can go a long way in saving probate costs:
Assets that are part of a trust are generally dealt in a way as if they are separate from the estate of a particular individual. Funds in a trust can avoid probate and thus reduce costs. The trusts that are created during the lifetime of an individual are called Inter Vivos trusts and are generally looked after by a trustee. You can also establish a testamentary trust for your spouse so that your family does not have to pay probate fees a second time at the time of her death. Testamentary trusts come into effect after the death of the concerned individual. LA Probate Law says that the trusts are generally created for the benefit of the children and to save taxes.
Latest posts by Scott Schomer, Estate Planning Attorney (see all)
- Understand the Limitations of Social Security and Medi-Cal - May 5, 2019
- Basic Estate Plan Components - May 4, 2019
- Estate Planning and Remarriage - May 3, 2019