Almost two-thirds of American adults have done no estate planning. One of the reasons that statistic is so shocking is because death is inevitable.
Estate planning is more than creating a will that outlines how you want your assets distributed after passing away. Done correctly, it can ensure that your heirs receive those assets promptly, and in many cases avoid a lengthy probate.
Probate is a legal process that occurs after someone dies. It includes validating the will, inventorying the deceased’s assets, paying debts and taxes and distributing any remaining assets to the heirs and other beneficiaries.
The time and expense involved in the probate process can vary depending on the estate’s size and complexity. While it typically takes a few months, it can take several years in some cases.
How can you avoid probate for your assets?
So, is there any way to avoid probate? Texas law permits a simplified probate process if your estate, excluding the homestead and exempt property, is valued at $75,000 or less. If your estate is larger, then avoiding probate takes some planning. Here are some strategies you may want to consider:
- Joint ownership: If you own property with someone else in a joint tenancy with the right of survivorship, then upon your death, your co-owner automatically inherits the property and bypasses probate.
- Beneficiaries: Accounts such as retirement funds and life insurance policies allow you to designate individuals to receive the proceeds without going through probate.
- Trusts: You can transfer your assets into a trust where a third party will manage them. Upon your death, the assets are passed directly to the beneficiary.
Some trusts can also protect assets from creditors. With a revocable trust, you still retain some control over your assets. This caveat allows creditors to make a claim against the trust. In an irrevocable trust, once your assets are transferred, you no longer have any control over them. Therefore, your creditors can’t make any claim. However, one major drawback of an irrevocable trust is that you can’t change it without the beneficiary’s permission.
When creating your estate plan, it’s crucial to have experienced legal guidance to help you keep more of your assets within the family and also help ensure a smoother transition of your assets to your loved ones.