FREQUENTLY ASKED PROBATE QUESTIONS
DOES A WILL AVOID PROBATE?
No. A Will is only effective if it is "admitted to probate" by a Probate Court. Probate Court involvement will be necessary to give the Personal Representative (sometimes called an "Executor") the authority to collect your assets, pay your debts, pay the fees and distribute the remainder to the beneficiaries according to the Will. Your personal financial affairs may be available for public inspection because documents that are filed with the Probate Court are available to the public.
CAN I AVOID PROBATE WITH JOINT PROPERTY?
Yes. Titling your assets jointly with others almost always avoids probate. Unfortunately, there can be disadvantages. First, somebody else will own the assets besides you and the assets could be available for their legal obligations. Additionally, using joint ownership to avoid probate can also increase the death tax bill for the surviving owner.
HOW CAN I AVOID PROBATE WITHOUT THE
DISADVANTAGES OF JOINT PROPERTY?
Some people choose to use trust agreements which contractually avoid probate and allow them to be, for all practical purposes, the sole owners of their property while they are alive. Using trust agreements also permits tax planning which can minimize death taxes.
HOW CAN I TRANSFER MY RESIDENCE SAFELY AND MINIMIZE TAXES?
Some people use "qualified personal residence trusts"
("QPRTs"). A QPRT is a trust that would own the residence after you
transferred ownership to it. The trust would allow you to live in the
property for a number of years and then the property would pass to your
beneficiaries. The transfer to the trust is a gift. Because of the valuation
factors issued by the IRS, the value of the remainder interest passing to
your beneficiaries is discounted. As a result, you can make a gift to your
beneficiaries at a reduced value allowing more property to be transferred to
your beneficiaries at less tax cost. After your ownership term ends, the
beneficiaries would technically own the property. You could be required to
pay "fair rental" to the beneficiaries, but this arrangement could actually
provide a significant tax savings to you and your family. A QPRT can also be
used for vacation homes.
Navigate this site: