Whether you are graduating from college, starting a family or well on your way into the prime of your life, estate planning rarely makes the top of anyone’s to-do list.
Ignoring estate planning is unwise because it is an integral part of planning for your future; just like you did things to prepare for college or to get married, your future requires your foremost attention as early as possible in your life.
Understanding the reasons to avoid probate can be a valuable lesson that sets you on a path towards financial wisdom. First, let’s understand what probate is and why we want to avoid it.
What is probate?
Probate is the legal process of validating a will and the distribution of assets after a person passes away. While it serves a crucial purpose, it is time-consuming, expensive and public. Many people opt for alternatives in order to avoid probate and make it an easier process for their loved ones after they pass.
Probate proceedings can take months or years to complete. During this time, your loved ones may face delays in accessing the assets you left for them.
In many situations, they need those assets, so these delays, especially when unnecessary, are not only inconvenient but can also lead to financial problems for your loved ones.
Imagine your loved ones took care of you and paid for all expenses related to your passing and you left them money to cover those expenses. Probate can not only create unnecessary delays in them getting those funds but also eat up some of that money because the process itself can be costly.
Costs add up
Probate comes with its fair share of fees, including court costs, legal fees and executor fees. By avoiding probate, you might save a significant amount of money that you can direct to your loved ones or future endeavors.
Probate is a public process, meaning that details about your estate become a matter of public record. If privacy is important to you and your family, exploring alternatives like revocable living trusts can help keep your affairs confidential.
Plan for incapacity
While many people associate estate planning with post-mortem matters, it is equally important to plan for your incapacity during your lifetime, just in case.
By establishing powers of attorney, healthcare directives, and other critical legal documentation, you can ensure that you oversee what happens to you and your money, not only after you pass but also if you become incapacitated and need special care.
So, what are better alternatives to probate? One popular option is the establishment of a revocable living trust. This legal tool allows you to transfer your assets into the trust during your lifetime, ensuring a seamless transition to your beneficiaries with no probate.
Besides trusts, there are other alternatives at your disposal, such as:
- joint tenancy
- beneficiary designations
All of the above can also help you achieve your estate planning goals while avoiding the pitfalls of probate.
No matter where you are in life, estate planning is for you, and avoiding probate is one decision that can save time, money and offer privacy if you desire.
By understanding your options and the different alternatives to probate, you are better equipped to make informed decisions that lead to better outcomes for you and your loved ones.