Probate is an expensive process and sometimes quite an agonizing one.
However, it can be very useful in certain situations, especially if a person has a good number of creditors. Without probate, creditors can come after someone’s estate (in Illinois) for two years, a wait that can become quite nerve-wracking. Probate shortens this period to six months. This is especially important for lawyers, doctors, a small business owner, or someone who had a lot of debt before they died.
If you do not have creditor issues, you might wish to avoid probate. To avoid probate you must understand how assets transfer to others once a person dies.
An asset, like a house, bank account or an IRA can transfer in one of three ways: through the probate process, automatically on death, or directly to a designated beneficiary.
Assets that go through the probate process are assets that someone holds in their own name without any joint tenants or beneficiaries on the title to the asset.
Assets that transfer automatically at death are held in a trust or in joint tenancy.
Assets that have beneficiaries, including accounts that contain pay-on-death or transfer-on-death provisions, transfer to the person whose name is on the beneficiary form no matter what any other document says.
So, if you want to avoid probate, you need to have all of your assets held in a trust, joint tenancy, or have a beneficiary.
Please remember that there are many issues to consider when arranging your assets. Advice from a lawyer will help you determine the right course of action to ensure that your assets are dealt with appropriately after you die.
Over the next few weeks and months this blog will be exploring in some detail the various aspects of estate planning and the ins and outs of various strategies to assist you in determining which is the best method for you and your family.