The term, probated, refers to estates held in probate. This process is used to determine the value of assets owned by a person who has died and validate their last Will. An estate administrator is designated within the Will and is responsible for overseeing the estate and handling numerous duties.
Strategies exist to prevent estates from being probated. These measures must be taken prior to death. Most are quite simple and can be accomplished without the assistance of an estate planner. Others require the execution of legal documents and require the services of a probate attorney.
Estate planning is important for everyone, regardless of the size of their estate. Estate planning involves more than deciding who will receive your financial assets and personal belongings when you die. It also allows you to designate Power of Attorney (POA) and establish healthcare proxies.
POA grants permission to a designated agent and authorizes them to make decisions should you become incapacitated. Power of Attorney rights should not be taken lightly. It is best to discuss this position with the person prior to appointing them.
Estate administrators are appointed through the Will. Experts suggest naming two individuals to this position. If the first person is unable or unwilling to carry out administrative duties, the second person can quickly step into the role.
Administering probated estates can be time consuming and challenging. Although Administrators are compensated for their duties, this position can be difficult if the appointed executor is a loved one.
In order to avoid probate a trust must be established. There are different types of trusts including limited term trusts, life insurance trusts, estate freeze trust, qualified personal residence trust and privacy trusts.
The most common is the irrevocable life insurance trust. ILITs are established to administer life insurance policies. The Last Will and Testament is placed in the trust and death benefits are exempt from taxation. ILIT proceeds are not probated and can be distributed promptly.
Payable on death (POD) beneficiaries can be established on checking and savings accounts by filling out forms provided by the bank. The funds can be distributed amongst several beneficiaries if desired.
Transfer on death (TOD) beneficiaries can be established for life insurance policies, investment accounts and individual retirement accounts (IRA).
Rights of survivorship should be established for real estate holdings. Survivorship rights allow automatic transfer of property to designated beneficiaries without being probated.
The probate process can oftentimes bankrupt the estate. By taking steps to keep assets out of probate, you can guarantee your loved ones will receive everything you want them to have. Feel free to browse our probated article library to learn more about probate, inheritance, estate planning and other life matters.
Published on May 24, 2009 at 02:09 AM