Estate planning must be done in advance and with forethought. Otherwise, your family could go through legal difficulty during an already tough time. Usually, an estate would need to go through the probate process before the assets can be distributed to the beneficiaries. There is a reason why many families will do what they can to avoid the probate process. There are many steps that must happen during probate before the estate can be closed. After authenticating the will, creditors must be notified oh, so they can file their claims. They have months to submit their claims to the estate.
In addition, the probate process can also add time when there are disputes among family members. Interested parties may contest the will, challenging its validity. Then, there may be many months, or even years, added to the probate process.
Because probate can be very difficult and technical, many families decide that they want to avoid it altogether by any means possible. There are a number of options that can help keep an estate out of probate. An experienced estate planning attorney can help explain your options and select a plan that works for you and your family. Then, the lawyer would help you draft the documents and execute them, so the estate plan is in place when you need it.
One of the most common ways that families avoid probate is by establishing living trusts. These financial instruments are called living trusts because They are created while you are still alive.
A living trust requires the following:
- A grantor to set up and establish the trust
- A trustee to manage the assets of the trust
- A trust instrument that will create the trust and provide terms
- Assets that are used to fund the trust.
Any assets that you place into the trust can pass directly to beneficiaries without having to go through probate. Some living trusts are revocable, meaning that they can be changed right up
until the time of the grantor’s death. Other trusts are irrevocable, and they cannot be changed. In order to entirely move assets out of your name (to protect them or to qualify for a Medicaid Trust), the trust would need to be irrevocable. Being able to exert control over decisions pertaining to assets is an indicator of ownership.
Beneficiary deeds are another way to transfer property that keeps it out of probate. Usually, real estate must go through the probate process. However, a transfer on death deed automatically moves the property into the name of the listed person upon the death of the grantor.
So long as the grantor is alive, they retain the ability to exercise complete control over the property. All normal rules of property ownership would apply, and creditors could still place liens on the property. The fact that the property remains in the name of the grantor could complicate their efforts to protect their assets if they needed long-term care.
A beneficiary deed is an easy and lower-cost way to transfer property in a much quicker manner than if you had to go through the probate process. However, the grantor loses the ability to potentially control what the beneficiary may do with the property, as they would have if they established a trust.
If the deceased person jointly owned property with someone else, that property would not need to go through probate. The other joint owner would simply assume full control and ownership of the property upon the death of the co-owner. Most often, the situation applies when two spouses own real estate together.
In California, there is no legal process necessary for the joint owner to become the full owner. All they would need is the paperwork that shows that they are a joint owner. Besides real estate, there are a number of other accounts that could be owned jointly, including bank and investment accounts.
California adds another way that you can easily transfer property outside the probate process. Your account may be designated as a “payable on death “account. You would continue to own and exercise full control of the assets in the account. They would automatically be transferred to the beneficiary upon proof of death.
Beneficiary Account Designations
Some accounts do not need to be placed in a trust, nor do they need to go through the probate process. When accounts rely on beneficiary designations, they are passed directly to the beneficiaries upon the death of the account holder.
Here are some accounts that rely on beneficiary designations:
- Investment accounts
- Retirement accounts
- Life insurance proceeds
It helps if you have as many of your assets as possible and accounts with beneficiary designations, although it is not always possible. At least you may be able to keep a large portion of your estate out of probate. You should review these designations periodically In order to ensure that they still meet your needs and current life situation. For example, a beneficiary May no longer be a part of your family, or they might have died. The beneficiary designations on the account are binding.
Contact a Los Angeles Estate Planning Lawyer Today
The attorneys at the Arshakyan Law Firm work with families to help them devise an effective estate plan. We can guide you through what is normally a difficult conversation with thoughtfulness and commonsense ideas to help your family. To learn more about how we can help, call us today at (888) 851-5005 or send us a message online