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Most people don’t know or underestimate the importance of making provisions for distributing their property upon death. While everyone avoids dwelling on the estate planning process, it is an important precautionary process that can save your family members a lot of time, stress, and pain for your children in the future.
Having a detailed will to be executed after your death ensures that your wishes are actualized, and the process is followed smoothly. Below are a few facts to know about estate planning and the general probate process.
Probate is a Legal Process of Changing Titles of Assets Owned by a Deceased Person
If the deceased person had assets, such as bank accounts, real estate, investment accounts, and others in their name, nobody can access these assets until the court appoints an executor or personal representative. Once appointed, the executor can use the court order to transfer ownership of these properties for distribution according to the will or decisions made by the family.
Not All Assets Can Be Probated
Only assets individually owned by the deceased person can be probated. For instance, if a husband and wife share a joint account or property, and either of them dies, the joint account or property automatically belongs to the remaining partner. Unlike other properties, the remaining partner doesn’t need to probate the property to access it.
Similarly, if a deceased spouse left a 401K plan, IRA, annuity, or life insurance policy where the other partner is a beneficiary, they don’t need to probate the matter in court to access these benefits. The surviving partner can simply contact the financial institution to access life insurance proceeds or assets.
Probate Takes a Lot of Time and Is Costly
While probate laws vary from one state to another, in most states, such as Massachusetts, wills and personal representatives can be appointed even within seven days after death. However, in reality, courts can take weeks or months to process probate filings. Note that nobody is allowed to access assets in probate during this period.
This explains why real estate taxes, mortgage premiums, and funeral bills of deceased persons often take several months to be settled. Legal fees for probate cases, filing probate documents, and advising personal representatives are also costly. Like other court cases, probate matters can cause stress in families and affect relationships.
Being in Probate While Alive is Worse Than When Deceased
Interestingly, some probate cases involve live persons. If someone becomes fully incapacitated and cannot sign income tax returns, pay bills, use a phone, or make health decisions, and doesn’t have a health care proxy or Durable Power of Attorney, family members or friends can petition the court to appoint a conservator.
A conservator is a proxy appointed by the court to make financial decisions of the incapacitated person. They should pay bills, file tax returns, make health care or residency decisions, and apply for Medicaid benefits. The probate court often monitors conservators’ actions.
Endnote
The entire process is challenging and confusing. Fortunately, you can avoid probate with some bit of planning. For instance, you can create and fund a Revocable Living Trust to pass your assets to all intended beneficiaries. Having a Health Care Proxy or Durable Power of Attorney also eliminates the need for an appointed conservator.
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