Regardless of the value of your assets or the size of your estate, if you have property or financial assets that have not been legally and formally dedicated to specific beneficiaries, you can expect to ensure probate. Unless a proper estate plan is created in advance of your death, your loved ones will likely be required to go through probate court to decide where those assets will be distributed.
Creating a will is NOT enough alone to keep your estate from going through probate.
The good news is that you can take several steps to avoid the probate court process and ensure your beneficiaries can easily access their inheritance once you pass.
Why would I want to avoid probate court?
The probate court system is designed to ensure your assets are distributed to pay debts and then transfer the remaining assets to people who inherit them. They are not beholden to having your best interest in mind; they are a way for the courts to supervise the disbursement of any assets through an appointed executor or personal representative.
Probate can take several months to well over a year to handle your case. It can become costly to pay court fees based on the state you live in, the size and structure of your estate, and whether people come forward to contest the will (if you have one in place).
My estate is small and simple. Will it have to have to go through probate?
If you have less than $15,000 in a bank account with NO other transferable assets (life insurance, investments, property, retirement accounts, and other assets), and no will, then your family will not need to go through probate. Instead, your surviving heir may be able to fill out an affidavit to transfer funds to their account.
You can complete a transfer-on-death deed for investments, retirement accounts, and life insurance. For car titles, heirs must go through a transfer process with the DMV providing verification of previous ownership and a death certificate to transfer the title. The state of Georgia does not allow the transfer of real estate property to go through a deed process.
Regardless of whether you have a large or small estate, there are still various methods to avoid the courts and ensure your assets are disbursed according to your final wishes.
Can’t I just give away my assets to loved ones before I die?
The short answer is yes, but you may still want to seek legal guidance to avoid unexpected future tax burdens. Giving property away before you die means the property must be held in their name, and any financial assets may have annual limits based on the size of your estate and changes in any tax law over time.
It’s important to note that if you give ownership of your property to loved ones while you are still alive, you no longer have a say in managing that property. Depending on your relationship with your heir(s), it could be sold out from under you, or become vulnerable to legal judgment and possession if the owner gets into financial or legal trouble.
Will joint ownership avoid probate?
Property owned jointly is passed to surviving owner automatically without probate. This includes real estate, vehicles, financial accounts, and securities. While it will avoid probate, note that the joint owner has legal rights and access to the property while you are living. As mentioned above, any judgment against them could also affect your assets.
Can I afford to create a living trust?
While attorney fees to set up a living trust are higher than the fees to create a will, in the long run, they are typically significantly lower than the court fees and taxes you’ll pay without one. A trust will provide the highest level of protection for your assets.
A living trust places your property “in trust,” removing them from your probate estate upon your death. A trustee of your choosing controls the trust instead of the courts, and they’re obligated to distribute the trust assets according to the terms of the trust agreement.
For many people concerned about what will happen to their property and assets after their death, a better question would be: can you afford not to create a living trust?
If you are interested in learning more about protecting your assets and avoiding probate court in the state of Georgia, contact the team at Smith Barid to get started.