How to be Probate-Free!

by | Dec 19, 2018 | Uncategorized | 0 comments

Protecting one’s family from the requirement of probate can be done on a piecemeal basis or using a global-solution approach.

On a piecemeal basis, one can designate “payable on death” beneficiaries for each bank account and for every stock brokerage account. Doing so can add the desired beneficiaries to one’s vehicle titles and it can even add the heirs to one’s real estate title.

But the piecemeal approach has three significant drawbacks. First, the transfers involved in real estate and vehicle titles are not reversible. If the relationship between the owner and the beneficiary sours, the owner cannot remove the named beneficiary/owner from the title without the consent of that beneficiary. As much as we’d all like to believe that such a relational breakdown won’t happen to us, most attorneys have encountered such friction far more often than they’d like.

Second, the addition of a child or other beneficiary to the title of real estate can also have a devastating tax impact when the child or beneficiary later sells the property after the original owner passes away. That impact can cost the heir many thousands of dollars in unnecessary taxes when the property is later sold.

Finally, the piecemeal approach almost always ends up missing at least one significant asset which may force the probate process on the heirs even if most or all of the other assets have the necessary beneficiary designation.

The global probate solution, on the other hand, does not suffer from either of these shortcomings. Beneficiary designations in one’s Family Trust may be modified or even reversed whenever the owner wishes. The use of a Family Trust can also save the beneficiaries tens of thousands of dollars in taxes when the inherited property is eventually sold. And the instances of assets inadvertently being left out of the plan for Family Trusts are far less frequent than they are for the piecemeal approach.

So, for most people, the global-solution of the Family Trust is most often the best and most effective way to avoid probate.

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Daniel Patchin

Benjamin Monaghan, Attorney

Benjamin Monaghan