Why should I take steps to avoid probate? 

In short, Probate = Headache! To begin, notice must be sent to all next of kin whether or not they will inherit anything. In addition, there are expenses including court fees, attorney fees, executor fees, and other expenses. Probate may also delay the final distribution of your estate. Probate proceedings are public record. If your named executor resides out of state, a fiduciary bond will likely be required.

Isn’t setting up a trust complicated and expensive?

Actually, the cost of probate usually exceeds the cost of establishing a trust. If you choose a revocable living trust, there is no need for separate tax filings. The titles to certain assets should be changed to maximize the benefits of the trust, and some beneficiary designations may be necessary, but once that initial work is done, things will be a lot easier for your family after your death.

Myth or Fact?

The Myth: If I have a Will, my estate will not need to go through probate.
The Fact: Although this is theoretically possible, in our experience probate is usually necessary for at least some assets.

The Myth: My spouse and I own everything jointly, so a Will is all we need.
The Fact: If both spouses die together, probate may be required. Although some banks allow you to name a Pay on Death beneficiary on a joint account, others do not and many financial institutions do not allow you to name multiple beneficiaries or contingent beneficiaries.

The Myth: I added my son/daughter’s name on my accounts to avoid probate, so I don’t need to have a trust.
The Fact: A financial institution considers a joint owner of an account as owning half of the assets. If your son/daughter is sued, half of your account balance may be subject to garnishment. Likewise, if your son/daughter dies with you and no Payable on Death beneficiary has been named on the account, one half of the account balance may go to your child’s heirs like his/her spouse instead of your intended beneficiaries.

The Myth: I don’t have enough money to need a trust…
The Fact: Trusts are not only for the wealthy. In fact, the number one reason for setting up a trust for estate planning is to avoid probate, which is public record, can be expensive and may cause significant delays before your heirs receive their inheritance. Trusts also offer a number of controls and protections that are not available when only a Will is used. For example, you can designate at what age a beneficiary will receive their inheritance and/or the trustee can supervise how the inheritance is used. 

The Myth: A trust means my heirs pay more in taxes.
The Fact: With a properly drafted trust, the tax treatment of the inheritance will be similar to that of an inheritance that is received directly.

The Myth: Once I have a Will, I never need to think about it again.
The Fact: An estate plan, just like a home or car, requires maintenance. Periodic reviews are required as your circumstances change and as changes in the law occur.

The Myth: My Executor can handle my bank account after I die. 
The Fact: Your Executor must receive Court authority before he/she can access your funds. In fact, in most situations, a financial institution will not release any information to a family member or named Executor until the Court officially appoints the Executor. Although you have nominated an Executor in your Will, the Court must first make it official. This could mean that your family will not have access to your funds to pay your bills or pay for your funeral and burial. Your family may have to use their personal funds for those expenses until they can gain access to your accounts for reimbursement. This may present a significant hardship for some families.

The Myth: I recorded a Transfer on Death Affidavit so my children will inherit my house when I die.
The Fact: This is true, but keep in mind that having multiple owners on a house is complicated. How will they pay for the expenses until it is cleaned out and sold? What if one of them wants to live in it but can’t afford to buy out the other siblings? If any of them are married, their spouses will need to be involved because of dower rights. What if they cannot agree on when to sell the house, how much work the house needs before listing it, or what the purchase price should be? A trust can address all of these issues.

The Myth: I can gift up to $14,000 per year to each of my children so the nursing home won’t take my money.
The Fact: The rule that allows a gift of $14,000 per year to each of your children is federal gift tax annual exemption. Medicaid has its own rules. If the gift is made in the five year period before you enter the nursing home, Medicaid will impose a penalty period during which Medicaid will not pay for your care.