By Jeffrey Levine, Director of Retirement Education
Ed Slott and Company, LLC
Death is inevitable. It comes for us all at one point or another. Some sooner than later, but none can escape its grasp. Whenever that time comes, your “stuff,” including your financial assets, generally live on, and are still essentially yours until they are legally transferred to another person or entity. That transference of assets can occur in any number of ways, but often includes a process known as probate. Here’s how to avoid the time and expense of probate.
What exactly is probate? It’s a process whereby a deceased person’s will is proved, or validated, by the courts and can then be executed. Assets and other possessions included in the deceased person’s probate estate can then be distributed to the intended recipients.
While probate cannot always be avoided, when possible, it can pay to limit your probate expense. There are several reasons this might be the case including the fact that probate can be a very time-consuming and expensive process. Another big downside to probate is that it’s a very public process. Your will – and the provisions therein – become public record. For some, this loss of privacy, alone, is enough to try and find other means of passing assets to heirs. With that in mind, here are five ways you can avoid the expensive, time-sucking and public process known as probate.
1) Don’t Name Your Estate as Your IRA Beneficiary
When it comes to your IRA – or any other retirement account for that matter – it should pass to your heirs by way of beneficiary form. A beneficiary form is a legal document that allows the assets it controls to pass directly to the named recipients, and avoid the perils of probate. These beneficiary forms have so much power, in fact, that if your beneficiary form says “I leave my IRA to my ex-spouse,” but your updated will says “I leave all my assets to my current spouse,” guess who’s getting the money!? That’s right, your ex! (Side note: At that point, it’s probably a good thing you’re already dead.)
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