You’ve spent most of your adult life serving your country, building a career, saving money, accumulating assets and establishing a legacy. Now it’s time to decide how you will pass that legacy on to your children, grandchildren, other loved ones or maybe even your favorite charities.
You probably want to maximize the amount of assets passed on to your heirs. And you may want them to receive their assets as quickly as possible after you pass away. One obstacle could be probate, which is the legal process for settling an estate after someone dies.
During probate, the court and your executor will handle a number of legal and administrative issues, such as paying off debts, liquidating assets, filing a final tax return and more. The process can take months, and it can be costly.
Fortunately, there are steps you can take today to minimize the impact of probate after you pass away. Below are three tips on how you can structure your assets and your estate to maximize your value. Review your estate plan to see how these steps could benefit you and your heirs.
Accounts that have beneficiary designations avoid probate. Instead of going through probate, these assets are transferred directly from the account administrator to the beneficiary. Your beneficiary simply fills out a claim form, and the administrator processes the request.
Qualified retirement plans, such as IRAs and 401(k)s have beneficiary designations. You will also find beneficiary designations on life insurance and annuities. Also, you can establish a trust and then move assets into the trust to avoid probate. Since trusts have beneficiaries, all assets inside the trust will be exempt from the probate process.
Another way to avoid probate is to title certain assets as being “jointly owned.” When an asset is titled with joint ownership and one owner passes away, the asset simply transfers to the other owner. You can use joint ownership on things like real estate, bank accounts, non-qualified investment accounts and more.
Be careful, though. To use joint ownership, you will have to add the joint owner before you pass away. Your joint owner will have all the same rights and authority on the asset you have. Make sure your joint owner is someone you trust.
You can also minimize the impact of probate by getting assets out of your estate. One way to do that is to give assets away before you die. Your heirs receive their inheritances quickly and without having to wait for probate. You get the pleasure of watching your loved ones use your legacy to realize their goals, such as starting a business or paying for college.
If you have assets you don’t need, consider developing a gifting strategy. You’ll avoid probate and you may find the gifting experience to be rewarding and fulfilling.
We welcome the opportunity to help you plan your legacy and achieve your goals.
This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
15701 – 2016/5/31