Probate is the legal process which deals with the interpretation and execution of your will, or division of property if you do not have a will. After your death, this probate process can be long, stressful and expensive for your beneficiaries. Everyone needs to get paid, so the court, attorneys, referees and others all take their cut – this can add up to a sizeable chunk of your estate.
Several costs come into play during probate:
- Attorney fees – up to 4% of the estate andadditional fees
- Probate referee – 1% share of the estate
- Court filing fees – up to $2000
- Executor – matches the attorneys fee
- Uncle Sam – varying amounts of taxes and fees
All in all, roughly 10% to 25% of your estate will go to probate fees. For an estate worth $1 million, these fees can total $250,000!
Luckily, there are actions you can take to protect your assets and your family against the probate process. The experienced estate planning lawyer at the Law Office of James A. Zakasky can help you organize your assets and help your survivors avoid the probate headache.
7 Effective Ways to Avoid Probate
- Living Trusts–This will allow you to put your assets into a trust you control, which transfers to your specified beneficiaries upon your death. When a living trust is used in place of a will, your spouse, children and other beneficiaries can avoid probate altogether.
- Joint Tenancy–Entering into a joint tenancy arrangement will transfer all of your assets in the account to the other account holders upon your death. This option does restrict your individual control over the assets.
- Pay on Death/Transfer on Death Account–To set up a pay or transfer on death account, all you need to do is fill out a form at the bank naming your beneficiary. After your death, the beneficiary will need to provide proof of death to the bank, at which point the funds transfer.
- Life Insurance–While having life insurance won’t eliminate the need for probate, it can provide some quick cash to your survivors while going through the probate process. When worked into a properly designed estate plan, life insurance will complement other inheritance.
- Retirement Accounts–You are required to name a beneficiary whenever opening an IRA or 401(k) account. This will help your survivors avoid probate by directly receiving these assets.
- State Exemptions–Estates which fall below a specified dollar value may be exempted from the probate process. By managing your estate creatively using things like pay on death accounts and living trusts, you can drastically reduce the assets which are eligible for probate.
- Gifts–The easiest way to avoid probate is to give away your assets during your lifetime. Gifts to your spouse, qualified charities, tuition payments and medical expenses can all count.
Protect your family’s inheritance. Call our Santa Rosa estate planning lawyer at (707) 595-1148!