Probate is the legal process of estate administration. If you use a will to direct asset transfers after you are gone, it would be admitted to probate. The executor that you name in the document would take care of the hands-on tasks, and the court would provide supervision.
It should be noted that there is a simplified probate process in Connecticut that can potentially be used if the value of the estate is $40,000 or less. Otherwise, the full probate process would be necessary.
This process serves a purpose that makes total sense. Creditors should have a chance to get paid before the assets are distributed to the heirs, and they are given that opportunity during probate.
The court examines the will to determine its validity, and if anyone wants to issue a challenge, they can make their case while probate is underway.
These protections are worthwhile in a general sense, but for the rightful inheritors, the probate process is less than ideal. It will typically take nine months or more depending on the complexity of the matter in question. No inheritances are distributed while the court is probating the estate.
It is a public proceeding, so anyone that wants to find out how the assets were distributed can access probate records. There are also a number of expenses that accumulate during this process.
Probate-Free Asset Transfers
There are some types of asset transfers that are not subject to probate. Some people use them intentionally to avoid probate, and in other cases, the arrangement turns out to be a useful coincidence.
A life insurance payout is not subject to probate, and the court is not involved with someone inherits an individual retirement account.
Payable on death accounts are transferred to beneficiaries outside of probate, and property that is transferred via joint tenancy with right of survivorship would fall into this category as well.
Revocable Living Trusts
The most widely utilized probate avoidance tool is the revocable living trust. When you establish this type of trust, you act as the trustee while you are living, so you have complete access to the resources.
In the trust declaration, you name a trustee to succeed you after your passing. It can be someone that you know personally, but you can alternately use a professional trustee. Trust companies and the trust departments of banks provide this service for a fee.
Your heirs would be the beneficiaries of the living trust. When the time comes, the trustee will distribute assets to the beneficiaries in accordance with your wishes. The probate court would not be a factor.
The probate avoidance is a major benefit, but there are others. You create a streamlined estate administration situation when you use a living trust, because the assets are consolidated.
If you want to protect a beneficiary that is not good with money, you can include a spendthrift provision that would protect the principal from the beneficiary’s creditors. You can also instruct the trustee to distribute limited assets over an extended period of time.
Many elders become unable to make or communicate sound decisions late in their lives due to cognitive impairment or some physical ailment. To account for this, you can name a disability trustee to manage the trust in the event of your incapacity.
Attend a Free Seminar!
If you would like to learn more about the estate planning process, we have some great opportunities coming up in the near future. Our attorneys are conducting a series of seminars, and you can come away with a great deal of important information if you attend one of these sessions.
There is no charge, but we ask that you register in advance so we can reserve your spot. To see the schedule, visit our seminar page. When you identify the date that works for you, follow the simple instructions to register.