Estate planning is an important process that ensures the proper distribution of assets according to your wishes. One significant concern that individuals often have regarding estate planning is the probate process.
Probate is the legal procedure that validates a will and oversees the distribution of assets. However, you have options to avoid probate and make the transition of your assets smoother for your loved ones.
1. Create a living trust
A living trust, also known as a revocable trust, is a legal arrangement that allows you to transfer your assets into the trust’s ownership while alive. Upon your passing, your assets will not go through probate because the trust owns them. A successor trustee you choose will manage and distribute the assets to the beneficiaries as specified in the trust document.
2. Designate beneficiaries
For assets like life insurance policies, retirement accounts and payable-on-death accounts, you can designate beneficiaries. When you pass away, these assets transfer directly to the named beneficiaries without the need for probate.
3. Gift assets during your lifetime
You can gift assets to your loved ones while alive. By doing so, these assets no longer get considered as part of your estate and will not go through probate upon your passing. However, doing so also means gift tax considerations to be aware of, which makes it essential to understand the limits and requirements associated with gifting.
Surprisingly, only 34% of Americans have an estate plan. Procrastinating on creating your own estate plan could mean that if the unexpected happens, your family may face even more hardship beyond the grief of losing you.