Our Scarsdale probate attorney knows that you probably assume all you need to do to keep your estate out of probate when you die is make sure that you have a will. Unfortunately, that’s just not the case – and you need to learn why wills are not enough to avoid the probate process. If there is one estate planning myth that is more common than any other, it would be the misconception many people have about the impact of a will on the probate process.
A will requires the probate process
Many people believe that a Last Will and Testament is all that is needed to ensure that an estate avoids probate. That belief is completely wrong and demonstrates a lack of understanding about what probate is actually designed to do. To be clear, there are incidences in which you can have only a will and still manage to keep your assets out of probate, but it is never the Last Will and Testament that accomplishes that feat. The fact is that wills alone cannot keep your estate from being subject to probate, and it is important to understand why. So, let our Scarsdale probate attorney explain.
Understanding why the probate process is necessary
Probate is the legal process used to identify a deceased person’s property, account for it, and assess its value on the day he or she died. This is done so that creditors who have legitimate claims to a portion of the estate can attempt to recover money owed to them before the assets are distributed to the decedent’s lawful heirs. Obviously, these debts include any taxes that might be owed by the deceased as well.
What is the purpose of the will?
The role of the Last Will and Testament is to direct the distribution of the estate assets when you die. With a will, you are able to provide details about which beneficiaries receive which assets, to ensure that your last wishes are respected in that regard. The reasons wills are important is that a failure to create a will can trigger the state’s intestate succession provisions under state law. Having a will prevents that from happening, as long as the will is deemed valid by the probate court.
Having a will does not, however, determine whether probate is needed. The only question involved in determining whether your estate is subject to the probate process is whether any of your assets are subject to probate. As a general rule, probate assets typically include any assets in your name that do not transfer to others when you die. And no, the process of declaring those transfers in your Last Will and Testament is not enough to make them non-probate assets.
A trust can help you avoid probate
When you create a trust and transfer assets to the new entity, those assets are no longer owned by you in a legal sense. That enables them to be free from the probate process, and upon your death, they will be distributed in accordance with the terms you have established for the trust.
Payable on Death accounts
This technique involves having special designations on bank accounts and other financial vehicles that ensure that those accounts automatically transfer ownership to a designated beneficiary when you die. That automatic transfer of ownership enables the account to forgo probate.
Transfer on Death securities
New York law allows stocks and bonds to be registered in a way that provides for their automatic transfer to heirs when you die. The entire transfer is done between the brokerage firm and your beneficiaries.
Insurance and retirement accounts
Since insurance policies typically provide the opportunity for you to name beneficiaries, they too are considered in the same manner as other transfer-on-death accounts. In this instance, when you die the proceeds automatically go to your named beneficiary or beneficiaries. Retirement accounts. There are certain types of retirement accounts that can also enable you to avoid probate.
Advantages and disadvantages of avoiding probate
There are risks involved in many of these techniques, but only if you try to apply them on your own. For example, the creation of a living trust can provide you with an opportunity to remove assets from your name and allow the trust to own them. You have to name yourself as trustee and provide a designated successor trustee to take control when you die and ensure that everything is distributed to your beneficiaries according to the terms outlined in the trust. However, this can be laypersons to do on their own, for a variety of reasons.
The rewards for doing this the right way are many. With the help of a good estate planning attorney, you can ensure that your estate plan protects your assets from probate. At the same time, that attorney can assist you in developing strategies to grow your wealth over time, prepare for retirement or incapacitation, and address other critical asset protection concerns.
If you have questions regarding wills, probate or any other estate planning matters, please contact the experienced attorneys at the Law Offices of Mary A. Miller, P.C. for a consultation. You can contact us either online or by calling us at (914) 939-6565. We are here to help!