Estate planning can help relieve the burden left behind for loved ones, especially if you’re able to avoid probate. Besides planning early, a few key steps taken now can save your loved ones months of waiting in the future.
Probate is the court-supervised, public process through which a will is executed and the estate is settled. The probate process can take a long time, and beneficiaries can’t receive their inheritance, including property and funds, from the estate until probate is finished. The process can also be costly, especially if you need to hire a probate attorney, and a portion of the estate could go to the court to cover fees. After the probate process is complete, everything in the estate, including the value and the inheritor, becomes public record. These are just a few reasons why you want to avoid probate.
Michael Horn, attorney with Horn Law Offices in Des Moines, Iowa, says one of the easiest ways to avoid probate is by establishing ownership of real estate or other property with joint tenancy with rights of survivorship, so the assets can transfer directly to the other owner upon your death. You can also make transfer-on-death designations for securities and property.
“Financial assets can avoid probate and be easily transferred to another person through joint ownership of accounts, Pay-on-death (POD) accounts, or by listing beneficiaries in a life insurance policy,” Horn says.
Some people prefer PODs to joint ownership of an account because the POD beneficiary has no rights in the property until death occurs.
Horn says you can also avoid probate by creating a trust. A trust establishes a separate legal entity that owns your assets, so the trust still exists and can transfer your assets without going through probate when you die. Trust rules are more complex, so you will want to talk with an attorney about them.
Horn says it’s best to make arrangements to avoid probate as early as possible, and he suggests giving away some assets during your lifetime.
“But you need to be careful of IRS tax gift limits,” he adds. “You also need to be aware of Medicaid look-back periods.”
Medicaid has a look-back period of five years, and if you’ve given away assets in that time, it may affect your eligibility. If you’re concerned about your Medicaid eligibility, Horn suggests talking with a probate or elder law attorney before giving away assets.
Having a will is a good starting point to having your affairs in order, but it isn’t always enough to guarantee that all your wishes will be carried out exactly the way that you want after you pass. Wills are usually read after funeral services have already taken place, so any funeral wishes included in the will become irrelevant. Instead of providing funeral arrangements in your will, consider advance funeral planning with Preneed Funeral insurance.
Advance funeral planning gives you the ability to plan and pay for your funeral yourself. You sit down with a funeral director and plan out every product and service you want for your funeral. The funeral director tallies up the price of your proposed funeral, and that is how much you pay for your Preneed Funeral insurance policy. You can make a single, one-time payment, or you can choose to pay through premiums.
With advance funeral planning, you can have a say in how you are remembered and rest easy knowing that your loved ones won’t have the burden of planning a funeral while they’re grieving.
Find a Preneed funeral home partner in your state >
Disclaimer: This article is for educational purposes only. It is meant to give you general information and a basic understanding of the law, not to provide legal advice. By using this website, you understand that there is no attorney/client relationship between you and the publisher. This website or article should not be used as a substitute for competent legal advice from a licensed professional attorney in your state or jurisdiction. This article is not published for advertising or solicitation purposes. Regardless, the hiring of a lawyer is an important decision that should not be based solely upon advertisements.
Photo credit: iStock
Kelly Rayburn, AVP national sales and distribution at Wellabe, and Olga Villaverde, from Lifetime TV’s The Balancing Act, explain the importance of preplanning your funeral. While a difficult subject, advance planning can alleviate financial and emotional burdens for your family members.
More topics at thebalancingact.com
Wellabe offers life and supplemental health insurance plans to help you prepare for good days and bad. We’ll always be here to empower you to be well — well prepared, well protected, and well loved.
