Lots of people want to avoid probate. That’s the court process that a family must go through to distribute anything that was in the decedent’s name alone upon her passing. Despite its bad reputation, probate isn’t the end of the world. Yes, it’s a hassle, and yes, there are hoops to go through, but you can hire an attorney to do most of the work for you.
If you still want your family to avoid probate, many people opt to make all of their property into “nonprobate” assets. This is anything that has someone else’s name on it in addition to yours at your passing. For example, many people purchase homes together with the spouse. We name beneciaries on life insurance policies and IRA’s. So why not just put someone else’s name on all of your assets and be done with it?
Because that quite likely will not result in the distribution that you would like. Let’s say Ophelia has an IRA valued at $100,000 and a life insurance policy with a death benefit of $100,000. She puts her son’s name on the IRA and her daughter on the life insurance. Easy, right? Not really. Her health care needs increase over the years and she taps into the IRA. By the time she passes away, her son inherits an IRA worth $50,000 and her daughter cashes in the life insurance policy for the full $100,000.
The best way to make sure people will inherit as you would like, while also helping them to avoid probate, is to work with an elder law attorney who can draw up the appropriate trust (if that is the right solution for you), help you properly list beneficiaries on your assets, and match you up with a qualified financial advisor who can make sure there will be enough in your estate to treat all the beneficiaries in the way you would like.
See tomorrow’s post on why it is dangerous to list a child as a joint owner of a bank account.