Many people assume that with a will, all their assets will be transferred directly at the time of their death to their heirs. Unfortunately, this is not true, because even with a will, your family will still need to go through a lengthy and complicated probate process.
What is Probate?
By definition, probate is a court supervised process, which is done to transfer a deceased person’s assets to his or her heirs. The heirs can be specified in the deceased person’s will. If he or she did not prepare a will, the heirs are to be decided by the statute of interstate succession.
What happens during the probate?
First, the heirs and beneficiaries will be contacted and notified about the Will. Keep in mind that during this period, the heirs and beneficiaries are given the opportunity to contest the Will. The will can be successfully contested if a) the decedent was not mentally capable of making decisions independently when the Will was created; or b) the decedent was unduly influenced by an heir or beneficiary.
Once the notification process is completed with no contest, all assets will be compiled into a list in order to be distributed according to instructions in the will. The final step of the probate process involves accounting for all the assets in the deceased person’s estate. This includes payment of debts, estate taxes, the decedent’s expenses or administrative cost.
Will your assets have to go through probate?
Some assets are subject to probate while others are not. Chances are, at least some of your assets will be subject to probate.
Assets that are subject to Probate include:
- Personal property such as vehicles, furniture, artwork, jewelry
- Individually owned accounts without a co-owner or a beneficiary in case of death;
- Individually owned real estate
- Business ownership interest in a sole proprietorship, or shares of a small company.
Assets that are not subject to Probate are:
- Life insurance proceeds,
- Retirement plan benefits from an IRA, 401(k) or a profit sharing plan
- Property jointly owned with the right of survivorship
- Any assets that are held in a living trust or with a designated beneficiary
If you wish to pass on your wealth to your family without having them go through the lengthy probate process, you need to plan ahead. Unless the majority of your wealth is in annuities or life insurance proceeds, or held in a retirement plan, you will need to set up a living trust. This way, whatever types of assets you would like to transfer will be passed on to your heirs without delay or extra cost.
Not sure where to start? Talk to a Heritage Living Trust representative today to get started with your estate planning.
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