Question: Can a Will ensure that my family doesn’t have to go through probate when I die?
Answer: No. A Will is not a foolproof solution for avoiding probate.
As an estate planning attorney, many people come into my office wanting a Will believing that it can avoid probate. Even though this is a common belief, it is not entirely accurate. While a Will is an important estate planning tool, it is not necessarily enough to bypass the probate process entirely. In certain circumstances, probate may still be necessary, resulting in potential delays, expenses, and complications for your loved ones. In this article, we will explore why Wills are not always a foolproof solution for avoiding probate and discuss other estate planning strategies that can help you protect your assets and streamline the distribution process.
The Limitations Of Wills In Avoiding Probate
While a Will can be an appropriate tool for many people to direct how they want their assets distributed upon their death, it has its limitations when it comes to avoiding probate. When I sit down with a client, I like to describe a person’s estate as being made up of two major categories of assets: probate assets and non-probate assets. Non-probate assets are those assets that are jointly owned like a jointly titled home or assets that have designated beneficiaries such as a retirement account for which you name the person or persons who will inherit the account upon your passing. When a person dies, non-probate assets are distributed (divided up and given out) according to title or beneficiary designation. Title and beneficiary designation trump any directions made in a Will. They are actually distributed “outside” of the Will and probate process. Probate assets, on the other hand, are assets that are solely owned by the person who has made the Will, are not jointly titled, and do not have designated beneficiaries. Probate assets are the assets that are controlled by a Will.
It is important to note that not all Wills must be probated. In general, probate is a legal proceeding in which a court validates a Will and oversees the management of the deceased person’s probate assets ensuring that the person’s debts and taxes are settled, and assets are distributed according to the Will (or intestacy laws if there is no valid Will). This process can take months or even years to complete. In addition, probate proceedings are a matter of public record, which means that anyone can access information about your assets and beneficiaries.
Most states have differing laws about when a Will must be probated. In Indiana, if a person has more than $100,000 in total probate assets, the Will must be admitted to probate and a court must authorize the named executor (personal representative) to collect the deceased person’s assets and distribute them according to the Will. Additionally, if there are disputes or challenges to the validity of the Will, it can lead to probate proceedings.
Why Probate Gets a Bad Rap
When my clients are considering a Will, I explain that probate is not always the big bad wolf that it is often depicted to be. In Indiana, the process has been streamlined; pleadings, notices, and orders are filed electronically, and in-person hearings are rarely required. However, it still can be time-consuming, costly, and public, which may not align with a person’s wishes for a smooth and private distribution of assets.
Strategies To Support A Will
If, in consultation with an attorney, you determine that a Will is the best choice for your estate planning needs, there are some estate planning strategies that you can utilize to overcome the limitations highlighted above.
One option worth considering is titling property as joint tenancy with the right of survivorship. This arrangement allows property ownership to automatically transfer to the surviving joint tenant upon death, thus bypassing probate. It is important to note, however, that this method may have tax implications and should be discussed with legal and/or tax professionals.
Other alternatives include establishing payable-on-death (POD) or transfer-on-death (TOD) designations for financial accounts, naming beneficiaries for retirement accounts and life insurance policies, and gifting assets during your lifetime.
By exploring these options, you can design a strategy that meets your specific goals and minimizes the time, costs, and potential complications associated with probate. Keep in mind that each of these strategies may have downsides to consider as well. Remember, consulting with an experienced estate planning attorney is crucial to help you navigate these strategies and ensure their proper execution. Additionally, an estate planning attorney can help you plan for any tax implications that may arise from the use of these alternative techniques. They will work with you to create a comprehensive plan that takes into account both your financial situation and your personal wishes.
In conclusion, while Wills are a commonly used tool in estate planning, they are not foolproof solutions for avoiding probate. By exploring alternative techniques and consulting with an estate planning attorney, you can create a comprehensive and effective estate plan that preserves your assets, minimizes costs, and ensures a smooth transfer to your beneficiaries.
Submit your questions to Ask The Elder Law Esquire and the answer may be featured in our next blog!
