May 3, 2019 PROBATE PITFALLSDo you know what happens to your assets and property after you are gone? Your loved ones may have a hard time accessing them.Probate is a legal process that takes place after someone dies. Typically, probate involves paperwork and court appearances by lawyers to go through such things like:Proving in court that a deceased person's will is valid (usually a routine matter)Identifying and inventorying the deceased person's propertyHaving the property appraisedPaying debts and taxesDistributing the remaining property as the will directs DISADVANTAGES OF PROBATE COSTS are typically much higher than if assets are passed by means of a revocable trust.The costs of attorneys, which are required in many states, court fees, litigations, and taxes are paid from estate property, which would otherwise go to the people who inherit the deceased person's property, their beneficiaries. TIME is needed to administer the estate.Probate can take a long time, possibly six months or longer, sometimes as long as two to three years. Maintaining the property until it is sold can create family tension and complications, especially for a surviving spouse. REAL ESTATEWhen a person dies, any real property in his or her name becomes a probate asset. Like other property, real property must be re-titled and distributed according to the wishes of the decedent.This process can become complicated if the property is left to more than one person. When a property is left to only one person, the property goes to probate, and after the court verifies that everything is in order, the property is deeded to the beneficiary.When the property is left to more than one person, the process is the same, except the property is deeded to multiple people. However, when multiple people inherit a single piece of real estate, they usually agree to sell the property instead of fighting over who is going to use it.Property being sold from a probate administration is a complicated ordeal. The length of the probate forces the beneficiaries to maintain the property financially, which can be expensive, especially with an older home.If a person dies with properties in more than one state, a separate probate must be opened in each state.Probate can be avoided by:◦ Placing the property in a revocable trust◦ Owning it jointly with someone who has survivorship rights or◦ Transferring the ownership to a person or irrevocable trust that allows the owner to live out his or her days on the propertyThese alternatives should be reviewed carefully before changing the title on a property. GUARDIANSHIP is similar to probate.The court oversees the guardian as he or she takes care of the ward and/or the person who has been declared incapacitated. This is important for the court to protect the rights of a person who cannot stand up for him- or herself. BANK ACCOUNTS owned in a person’s name are subject to probate and guardianship.In some states, even jointly owned property, possessions, or money will go into probate because they do not assume the right of survivorship. ◦ Rights of survivorshipmeans that when a person dies, the account automatically transfers to the spouse or other party. Even joint bank accounts must be placed in a revocable trust or have the right of survivorship specifically designatedAny bank account with the beneficiary designations FBO (for benefit of), POD (pay on death), and Totten accounts do avoid probate. IRAS AND 401(K) ACCOUNTSIndividual Retirement Accounts (IRAs) are subject to probate if there isn’t a designated beneficiary, or if the designated beneficiary is deceased and there is no secondary beneficiary. The IRS does have specific distribution rules and rollover provisions for surviving spouses who are designated beneficiaries. If there is no designated beneficiary however, any IRA and 401(k) assets will be dispersed over a shorter time frame with fewer available planning options. COURT INVOLVEMENT means the public nature of the probate proceeding can be less than ideal Probate isn’t always a bad thing and it does makes sense in certain situations. For example, if your estate will have complicated problems like debts that can't easily be paid from the property you leave, probate may be a better way to handle these issues.Whether or not you decide to invest time and effort planning to avoid probate ultimately depends on three factors:1. Your age2. Your health3. Your wealthWhen you're young and in good health, implementing a complicated plan to avoid probate now could mean you may eventually have to re-do it as your life changes.If you have very little property, you might not want to spend your time planning to avoid probate because your property may qualify for your state's simplified probate procedure.In the event that you’re 50 or older, in bad health, or own a lot of property, you may want to do some planning to avoid probate.GET YOUR FINANCIAL HOUSE IN ORDERIt is always a good idea to consult with a knowledgeable and experienced Financial Professional and lawyer if you are ever unsure of what is the best path for you to take. We partner with a law firm in order to help others get their financial house in order through power of attorney, wills and trust options that fits their family's needs. We will also provide each client with a 'Client Map', your one-page plan to leave behind so your hard-earned money or planning doesn’t get lost in the shuffle.Please CONTACT US to speak with one of our representatives today.None of the information in this document should be considered legal advice. You should consult your legal advisor for information concerning your individual situation. Legal services are not offered through, nor supervised by, The Lincoln Investment Companies. Sources:https://www.thebalance.com/what-is-probate-3505244https://www.nerdwallet.com/blog/finance/5-smart-estate-planning-steps-to-avoid-probate/ Free Retirement Guide It's never too soon to start preparing for retirement. But do you know what to look out for? Download our free ebook, "Retire Happy: A Simple Guide to Your Next Big Adventure." First Name Last Name Email Address Thank you! Oops!