Probate is a legal process that will be necessary if you rely a simple will to state your final wishes. You would name an executor in the document to take care of the hands-on tasks, and the court would supervise while the estate is being administered.
It serves a purpose because final debts are paid during probate, and the validity of the will is determined. If anyone wants to contest the terms, they can come forward while the estate is being probated by the court.
There is nothing inherently wrong with probate, but it is often not the best outcome for the rightful inheritors. Inheritances generally are not distributed until the end of the probate, and it will usually take eight months at minimum in most areas.
Another drawback is a loss of privacy because probate records are available to the general public, and there are expenses that are incurred during the process.
Transfer on Death Accounts
A transfer on death or payable on death account is an account that has a beneficiary, and you can name multiple beneficiaries. The beneficiary would not be able to access the assets while you are living, but they would inherit the resources after your passing. This transfer would not be subject to probate.
You can establish a payable on death account at a bank, and transfer on death accounts are offered at brokerages. A 401(k) account can be looked upon as a type of transfer on death account because you name a beneficiary who would assume ownership of the account after your death.
In some states, you can choose a transfer on death option when you register your motor vehicle, but Kentucky and North Carolina are not among them.
When you have a payable on death account or transfer on death account, you can designate different percentages for each person you name as beneficiary. Years ago, some institutions would require all the beneficiaries to receive equal amounts.
If you have multiple beneficiaries and one of them passes away before you do and you make no changes, the remaining beneficiaries would generally inherit the assets proportionately, depending on the standard practices adopted by the financial institution.
On the other hand, if there is one beneficiary that predeceases you, and you do not name an alternate, the assets would become part of your estate. The probate court would be involved in the eventual transfer of these assets.
A Revocable Living Trust Is a Better Choice
Another, and often better, option is to use a revocable living trust as your estate plan centerpiece if you want to facilitate asset transfers outside of probate.
If you establish a revocable living trust, you would be the trustee so you would not surrender control to anyone else. You can change the terms at any time, and since it is a revocable trust, you can rescind it and take back direct personal possession of the property if you choose to do so.
The asset ownership would be consolidated, and this would simplify the administration process after your passing. When you establish the trust, you would name a successor trustee to complete the administrative tasks. Of course, your heirs would be the beneficiaries.
You can set specific terms for how to distribute the assets after your passing. If you do not want to provide lump sum distributions, you can instruct the trustee to spread them out over a period of time.
Another benefit is the ability to name a disability trustee to administer the trust in the event of your incapacity. This is critical because a significant percentage of elders become unable to handle their own affairs late in their lives.
After your passing, probate would not be a factor when the trustee is distributing assets. You get this benefit along with all the others so a living trust is frequently a superior asset transfer method.
Schedule a Consultation Today!
We are here to help if you are ready to work with an Ashland, Kentucky estate planning lawyer to put a plan in place. You can set up a consultation if you call us at 606-324-5516, and our number in Florence, Kentucky is 859-372-6655. Our Charlotte, NC and Huntersville, NC locations can be reached at 704-944-3245.
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