Autumn Years Summer 2024

FINANCIAL PLANNING

Probate Issues Are Reduced by Proper Estate Planning By Nicholas Stratton® A proper estate plan can mitigate unwanted risks by anticipating what might occur and prevent

ing problems before they arise, which can reduce the complexity, length and expense of probate. Sound estate plan ning can make the probate process run efficiently and smoothly, protecting your estate’s value and legacy and preserving your family’s well-being. Probate involves: • Validating a deceased person’s will • Identifying and inventorying the property of the decedent • Getting property appraisals • Paying valid outstanding debts and taxes • Distributing the remaining assets and property according to the will • Applying state intestacy laws if there is no will Circumventing probate may reduce legal fees for your surviving heirs, protect privacy as probate is part of the public record, and avoid some estate tax, which can significantly reduce inherit able assets. Popular alternatives to probate A revocable living trust transfers assets to the trust but allows access to them during your lifetime. This probate avoidance technique can protect most property you own, including: • Bank accounts • Real estate • Jewelry • Art collections and heirlooms • Vehicles

financial institution’s POD paperwork process for all types of bank accounts. A TOD transfer applies to stocks, bonds and brokerage accounts in the same way. These accounts are not accessible to the beneficiary while you are alive. You can designate beneficiaries on various accounts types, such as: • Checking or savings accounts • Certificates of deposit (CDs) • Individual Retirement Accounts (IRAs) and 401(k)s • Inheritable pension and veteran benefits • Investment accounts As the testamentary deposit account owner, you can withdraw money, close the account or name a different benefi ciary at any time. There may be a short waiting period after the designator’s death before the bank or credit union releases funds, but probate is not a requirement. Depending on where you live, a POD account can also be a:

This type of trust functions like a will by leaving your property to heirs, but you can change the terms of your trust, the beneficiaries or revoke it entirely while you are still alive. After your death, the property held in trust is in the con trol of your named successor trustee. He or she then manages or distributes the property to beneficiaries according to the trust’s instructions without involving probate court. Life insurance and annuity policies Death benefits are paid directly to a designated beneficiary upon the death of the insured or annuitant and pass outside of probate. In some states death benefits are exempt from creditor claims for either the insured or beneficiary. Payable-on-death (POD) accounts or Transfer-on-death (TOD) A simple, no-cost strategy to keep money, even large sums, out of probate is by designating a beneficiary via the

26 AUTUMN YEARS I SUMMER 2024