You possibly may have heard that if you do not do estate planning, the court will decide who gets a share in your estate during a court process known as probate. Consequently, those who you would have preferred to get the most inheritance may end up with the least because you did not express your wishes in a will. You also may have heard that probate in New York is complicated and it may take a long time before your heirs can inherit. All of that is true.
So you probably are asking yourself now, “If I write a will, will it keep my estate from going through probate?”
A will is a fundamental estate planning document in which you express your desires concerning the disposal of your possession when you finally pass away. You get to name your beneficiaries and what you want them to receive.
But a will does not keep an estate from going through probate. On the contrary, a will necessitates probate because if there is a will, it must be validated by the probate court before the instructions therein can be carried out. If you wish to keep your estate from going through probate, consider executing a living trust (more of this later on in this blog).
Trusts are more complex than wills, so it would be best to get professional assistance from an estate planning attorney near you.
Our NYC estate planning attorneys are ready to help you plan towards probate avoidance.
What is probate?
Probate is a legal procedure whereby your will gets validated in a probate court before your wishes can be executed. If your will is found to be invalid, it is discarded and probate commences according to the state law of intestacy.
Notably, only assets that are in your name only (such as your home of which the deed contains only your name as the owner) are subject to probate. And these are exactly the same assets that can go in your will.
All other assets that are not held in your name alone and those that have beneficiary designation are not subject to probate.
Whether or not you have a will, the following assets will pass outside probate in NYC:
- Life insurance – You most likely already named a beneficiary in your life insurance policy, so it’s useless naming another beneficiary of this same asset in your will. It may ultimately lead to discrepancy
- Retirement accounts, such as 401(k) – Also has a designated beneficiary
- Transfer-on-death bank accounts – has a designated beneficiary who the funds must go directly to when the owner dies
- Assets in a trust – assets kept in a trust will pass directly to the beneficiaries regardless of what the will says
- Real property held by joint tenancy with rights of survivorship – The property will go directly to your joint owner when you pass away regardless of what the will says.
Using a living trust to keep your estate from going through probate
A living trust is a more complex but highly advantageous asset transfer instrument. It is preferred over a will because of its capacity to avoid probate.
You hold assets in a trust by funding/transferring the asset ownership into the trust such that the trust becomes the owner. When you pass away, such assets will pass to the beneficiaries quickly and directly to the beneficiaries you have named in the trust.
One great thing about living trusts is that you can name yourself as the trustee and use the assets therein to your own benefit until you become incapacitated or deceased. Then, the successor trustee – who you should also name in the trust – will step up according to your laid down instructions.
It is sometimes not possible or advisable to transfer all your assets into a trust. But if you are able to transfer the more valuable ones into the trust, own your home by joint tenancy, and keep your funds in a transfer-on-death account, whatever probate assets are left in your estate may become minimal. And if your probate assets are less than $30,000 in New York, probate will not be conducted.
Probate is expensive, time consuming, and hectic, and we understand why you would want to avoid it. Our estate planning attorneys NYC are ready to assist you. Call us.