There are some intricacies that you may not take into consideration when you are planning your estate, and you may make decisions without understanding all the facts. With this in mind, we will look at Kentucky probate laws in this post, and we will examine some transfers that would not be subject to the probate process.
Kentucky Probate Laws
The heirs to your estate are not the only ones who may have an interest in it. People sometimes pass away with debt, and other interested parties may have claims. To account for this, there is a legal process called probate. If you are in direct personal possession of property at the time of your passing, even if you have a will, the estate must be probated by a court.
For example, if you have money in the bank, and you leave it to your son in your last will, your son would not receive the money immediately. The will would be admitted to probate, and your son could not receive the money until the process had run its course.
The same situation would exist if you were to maintain personal possession of your home or any other personal property and leave the property to your son in your last will.
Now that you understand a bit about probate, let’s take a look at some of the ways that assets can be distributed outside of probate.
Life Insurance Proceeds
If you take out life insurance policies on your own life, you would name the beneficiaries. After you pass away, the beneficiaries would inform the companies about your passing. If everything is in order, the proceeds would be delivered to your beneficiaries, and probate would not be a factor.
It is possible to add a co-owner to property that is in your possession. This co-owner would be called the joint tenant.
Joint tenancy typically comes with something called right of survivorship. This would allow the surviving joint tenant to assume ownership of the entirety of the property after the passing of the other joint tenant. This transfer would not be subject to the probate process.
Though joint tenancy can sound like a good solution, you have to understand the fact that the joint tenant would have ownership rights in the property right away, even while you are living. As a result, the property that is owned by the joint tenant could be subject to attachment if the person were to run into legal difficulties.
Payable on Death Accounts
There is a type of bank or brokerage account that is called a payable on death account. These accounts are alternately referred to as transfer on death accounts or Totten trusts.
With this type of account, you name a beneficiary. You could alternately name multiple beneficiaries in many cases. The beneficiary would not be able to access the resources in the account while you are alive. After your passing, the remainder that may exist in the account would be transferred to your beneficiary, and the probate court would not be involved.
There are various types of trusts used in the field of estate planning. When property is held in a trust, such as a revocable living trust, it can be transferred to the beneficiaries outside of probate.
While we are on the subject, we should touch upon some of the benefits that you would gain if you use a living trust instead of a last will as your primary asset transfer vehicle. You can revoke or dissolve the trust while you are living, so you maintain control, but it would become irrevocable after you pass away.
A spendthrift provision could be included, and assets in the trust would be protected from the creditors of the beneficiaries. You could also instruct the trustee that you choose to distribute the assets over an extended period of time if you want to make sure that your beneficiaries have resources to draw from over the long haul.
There would be no spendthrift protections if you use a will to transfer your personal property, and the inheritances could be attached by creditors.
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