Navigating the probate process can be challenging, but it doesn’t have to be. Taking the time now to learn about the probate process and understand some of the more common probate pitfalls and roadblocks can help you and your family avoid unnecessary stress and complications when the time comes.
In this article, we’ll explain what probate is and why it’s important, and we’ll share things you can put in place right now to avoid headaches down the road. In fact, that’s our job — to simplify the process and make it easier on you so you can move through a difficult time with as little stress and as few complications as possible. Let’s jump in.
Understanding Probate: What It Is and Why It Matters
Probate is the court process that handles the estate of a deceased person (assets and outstanding debts) as they have instructed in their Will. They are called “the decedent” by the courts. If the decedent did not have a Will, their assets will be distributed according to Illinois statute. The key word there is court. It is a court process in which a person’s Will is legally carried out or administered according to the person’s wishes.
During the probate process, if there is an executor named in the Will, then that person becomes responsible for carrying out the Will instructions. If no executor is named, then the court will appoint an administrator.
While some assets can bypass the probate process entirely (transfer on death deeds, contracts, or bank accounts with a beneficiary already named, for example), the probate court process can generally take at least 6 months to years from start to finish to get through probate. So, be prepared to invest a little time during probate. There will also likely be legal fees to consider.
The Importance of a Valid Will
There is no question that having a valid Will in place can help speed up the probate process (and avoid probate pitfalls). A valid Will ensures greater clarity during the process so everyone understands what the person’s intentions are. Greater clarity means there are fewer questions about where and how assets are to be handled and/or distributed.
A valid Will can also help minimize family disputes over the distribution of assets. The loss of a loved one is an emotional time. Imagine how the stress of arguing over money or belongings could compound the grief. Regardless of whether the parties involved agree with the Will, the legality of the Will ensures the deceased’s wishes will be carried out as they wanted.
Having a Will in place can also ensure that guardianship is legally established for the care of any minor children. Additionally, a legal Will explicitly outlines any wishes of the deceased to donate part of their estate to charity. And finally, with no Will in place, the probate court has to follow the laws of the last state the deceased person intended to remain. That can take time and money, and it can also be physically and emotionally taxing for loved ones.
How Trusts Can Simplify Handling a Loved One’s Affairs
Having a Trust can streamline the entire process of asset distribution upon your death and, in some cases, avoid the probate process entirely.
Here’s how:
By creating what’s known as a “Revocable Trust,” you are essentially transferring ownership of your assets to the Trust itself. And that means your assets are no longer considered part of your “estate.” Upon your passing, the person you’ve selected to be the trustee can transfer your assets to the beneficiaries seamlessly without having to go through the probate process. Since there is no court oversight or involvement, the whole process can be more efficient and far less costly than probate.
A Revocable Trust is also a good solution for streamlining the process when you have other considerations. First, if you have assets in multiple states (bank accounts, homes, etc.), having a Trust consolidates your assets under one umbrella of oversight, which may avoid probate court proceedings in multiple states. Second, a Revocable Trust is a good plan if you wish to have your assets remain private. The probate process is public, which means your assets, beneficiaries, and plans for distribution are public, too. A Revocable Trust keeps your personal matters private, and this definitely can help in avoiding probate pitfalls.
Designating Beneficiaries Correctly
Choosing and then designating your beneficiaries is a crucial step in your planning process as you establish a Trust or Will. It is also a good way to avoid probate pitfalls. Think about your life insurance policies through work or independent sources. Consider, too, your retirement and investment accounts. Then, ensure that the beneficiaries that are noted on these accounts match what you have noted in your Will to avoid any discrepancies or disputes. Taking the time now to ensure your beneficiaries are clearly identified across all of your assets or policies where appropriate will ensure your wishes are fulfilled AND will save your loved ones from any misunderstandings.
Pro tip: Be sure to review and update your Will and your policies that have beneficiary designations after any significant life event. Read more about that here.
Keeping Your Estate Plan Updated
If you remember nothing else from this article, remember this: it’s essential to keep your Will and estate plan updated! It’s definitely not something you do once and then forget about. It’s something you will need to update each time there is a major life event such as a marriage/divorce, birth or adoption of a child, significant financial purchase, or the death of someone you’ve previously identified as a beneficiary. That last item is particularly important. If you’ve indicated a spouse as the beneficiary, and then you get divorced, they may be an unintended beneficiary upon your passing. This could cause unnecessary stress and complications for the person or people you would have preferred as your beneficiaries.
Discussions with your financial advisor, attorney, and accountant can keep you informed of changes in estate tax laws and other inheritance and trust laws, which may also influence your current estate plan. The bottom line is that periodically updating your estate plan and Will is a sound strategy to ensure the most current information is legally recorded.
The Role of Powers of Attorney in Planning for Probate
A Power of Attorney is essentially a legal document that gives someone the legal authority to handle your financial, legal, and/or healthcare matters while you’re alive and also if you become incapacitated in any way. Upon your death, the Power of Attorney is immediately expired. However, the role of a Power of Attorney can be valuable in planning for probate.
Someone with the authority of a Power of Attorney can help ensure your affairs are appropriately managed while you’re alive so that upon your passing, the probate process is smoother. The role of Powers of Attorney prior to probate is an essential part of an overall estate plan and avoiding probate pitfalls.
Protecting Family Farms and Other Unique Assets
Family farms are the backbone of this country. There are several strategies to protect family farms and other unique assets like these before probate. One is to establish a Revocable Trust, as we’ve discussed earlier. A Revocable Trust allows you to transfer the farm assets over to the Trust while you are still managing and running the property. You can also designate a beneficiary to manage the Trust after your death without going through the probate process.
Another strategy is to establish an LLC or a family-limited partnership. These strategies may allow you to protect your assets from legal challenges and gradually transfer ownership of the farm to your heirs as you see fit without having to go through probate.
Our estate planning attorneys can help you determine the best plan of action to protect your family farm or other unique land asset.
Navigating Medicaid and VA Benefits
When it comes to navigating Medicaid and VA benefits, each has certain restrictions that require careful management so you can protect your assets and ensure you have the healthcare you need.
Medicaid is a resource many people use to pay for long-term care, such as nursing homes, and it has strict income and asset limits. An experienced elder law attorney can help you create a Trust that will help protect your assets from being counted toward your eligibility. This is one strategy that will help you qualify for care without depleting your assets.
Veterans and their surviving spouses may qualify for VA benefits to pay for in-home care or long-term care. Like Medicaid, there are asset limits and other considerations that could impact eligibility. And, like Medicaid, there are strategies you could put in place that would preserve your assets without compromising or reducing your eligibility for healthcare benefits.
The best way to navigate Medicaid and VA benefits is through robust asset planning, including the use of asset transfers, and the creation of Trusts, beneficiary designations, and other legal tools designed to help you preserve and protect your assets and maintain your healthcare eligibility. Our estate attorneys can help with this.
The Impact of Joint Ownership on Probate
When assets or property are jointly owned, the surviving owner receives full ownership in the event of the death of one owner. And in this instance, the asset is transferred to the surviving owner without probate. This joint ownership applies to real estate, bank accounts, and investment accounts. Another thing to consider with joint ownership is that a Will is not necessary to transfer ownership because ownership automatically passes to the surviving owner.
Overall, joint ownership can help avoid probate pitfalls by eliminating the red tape of asset transfers. However, a caveat: it must be set up carefully and intentionally to make sure it aligns with both parties’ overall estate planning goals. Read more about the dangers of joint ownership HERE.
Seeking Professional Guidance to Avoid Mistakes
There is so much to know and understand when planning your estate. It can be overwhelming and tempting to just do it yourself and hope for the best (or worse, to procrastinate and leave it all for your loved ones to deal with!). Our team is ready to help you navigate the ins and outs of planning your estate and planning your future. Contact us today to schedule a consultation and ensure your estate plan is designed to avoid common probate pitfalls and protect your loved ones.