Filed in Estate Planning, on September 15, 2019
Many potential clients ask me to establish a trust for them because they wish to avoid the nefarious “court probate process.” However, in many cases, I end up giving these clients other more economical options that allow them to avoid the probate process without the expense of creating a trust. Not all lawyers will do this, and will simply say, “Okay, you want a trust; here is the fee to keep this estate out of probate.”
Not everyone has an estate that warrants establishing a trust. The “everyone” included in this group are the 99% of Americans who have smaller estates that comprise of a home, retirement accounts and bank accounts.
If you are part of the 99% described above, here are some tips for establishing an economical estate plan without a trust.
Record a transfer on death instrument for your residence. A transfer on death instrument is recorded at the county recorders office and allows you to transfer your home to a designated beneficiary when you pass away. This takes the home out of the probate estate and allows you to pass it directly to the named beneficiary without the court probate process. You still keep control over the property during your lifetime.
Contact your bank about making your accounts payable on death. A payable on death account allows you to designate a beneficiary for the account, much like a transfer on death instrument. This type of account takes the funds out of your probate estate and allows you to pass it directly to the named beneficiary without the court probate process. You still keep control of your account during your lifetime.
What about retirement accounts? The good news is that retirement accounts like IRAs and 401(k)s require you to designate a beneficiary and are not part of your probate estate.