Your estate represents a lifetime of work, so it’s understandable you’ll want to leave as much as possible to your heirs. However, today’s costly probate procedures present obstacles; for a hassle-free transfer, you need to simplify the probate court process.
After you die, your estate will be processed in one or more state probate courts, depending on where your assets are located.
If you die without a will, the court will decide how to distribute your assets, based on state laws. This can be an expensive process. Your estate may have to pay for court costs and legal advice your heirs may require.
You can simplify the probate court process and associated costs by increasing the items that are considered “non-probate” and are transferred without a probate procedure. These include:
- Assets registered as “joint tenants with rights of survivorship.” Ownership of these accounts passes directly to the other named account holders immediately upon your death.
- Assets with a designated beneficiary. Many retirement accounts (such as IRAs and 401(k) plans), and insurance products, allow you to name individuals or institutions as recipients of these assets when you die. These assets are excluded from your probate estate and transferred directly.
- Assets in a revocable living trust. A revocable living trust is a legal entity which effectively holds legal title to assets within the trust, providing for a direct transfer of assets to your beneficiaries.
- Transfer on death. You can specify that many of your assets, such as securities and brokerage accounts, be set up as “transfer on death” (TOD). Upon your death, they will bypass the probate court process and go directly to whomever you specify in your TOD policy.
You may not be able to take it with you, but with thought, you can ensure your heirs will inherit it hassle-free.