Estate Planning Tools That Can Help Avoid Probate
Probate is the court-supervised process of settling a decedent’s estate, including the payment of debts and taxes and the transfer of assets to heirs or beneficiaries. Probate can be complicated, time-consuming, and costly. It can also be contested if the decedent’s heirs or creditors raise challenges to the will or to the choice of executor or trustee. However, there are several ways to structure an estate so that probate can be limited or avoided altogether.
One option is to put certain assets into joint title with right of survivorship. This means your spouse, an adult child or another person you select becomes a co-owner of the asset. For a bank account, the process is as simple as filling out a form to add a co-owner. For real estate, you would need to execute a deed conveying partial ownership. In either case, the title document must make clear that the co-owner has a right to take over the property in full upon your death. Otherwise, your share of ownership becomes part of your estate.
Another option is to use beneficiary designations. Certain types of assets allow for the owner to name a beneficiary or beneficiaries to whom ownership of the assets transfers automatically upon the owner’s death without going through probate. Some assets that typically allow or require beneficiaries to be named include:
- Life insurance policies — The named beneficiaries only need to give the insurance company the certificate of death to have the death benefit distributed to them.
- Retirement accounts — Often a large portion of a person’s wealth is held in his or her retirement assets, like 401k accounts, IRAS and pensions. The owner should take advantage of the opportunity to name beneficiaries so that these assets do not have to go through probate.
- Transfer-on-death deeds — An interest in real property can pass directly to a named beneficiary if the owner executes a transfer-on-deed deed.
- Transfer-on-death or paid-on-death bank accounts — Kansas law allows for a financial account to be designated as a transfer-on-death or pay-on-death account. The owner can add this designation and name a beneficiary as well as a contingent beneficiary.
Perhaps the most effective option for probate avoidance in Kansas is to create a living trust. Beneficial ownership of any property owned by a trust will be governed by the trust terms and will not be subject to probate. During your lifetime, you can serve as the trustee and have full control of the assets. A successor trustee takes over upon your death and distributes the property based on your instructions.
Each of these probate avoidance techniques has a number of implications, including practical control of the assets, long-term care planning and tax implications. An experienced Kansas estate planning attorney can help you choose the right options for you and your family.