Probate can be a lengthy, costly and complex legal process that follows someone’s passing, tying up assets and causing stress for loved ones.
Fortunately, there you can take steps to simplify your estate and protect your family from the probate process.
Establish a living trust
Did you know that Virginia charges a probate tax for estates valued over $15,000? However, when you create a living trust, your heirs do not have to pay this tax or go through probate. By transferring your assets to a trust during your lifetime, your assets get distributed according to your wishes without the need for probate.
Many assets, such as life insurance policies and retirement accounts, allow you to designate beneficiaries. By doing so, these assets pass directly to the designated individuals, bypassing probate altogether.
Consider joint ownership of certain assets, such as real estate or bank accounts. When you own property jointly with someone else, the ownership automatically transfers to the surviving owner, avoiding probate.
Gifts during your lifetime
Rather than waiting to distribute assets through a will, consider giving gifts during your lifetime. The annual gift tax exclusion allows you to gift a certain amount to individuals without incurring gift taxes. By gradually gifting assets, you reduce the size of your estate.
Payable-on-death and transfer-on-death accounts
Bank accounts, investments and securities have payable-on-death or transfer-on-death options. Then, upon your passing, these assets transfer directly to the named beneficiaries without going through probate. Check with your financial institution to explore these options.
Regularly review and update your estate plan to ensure it reflects your current wishes and circumstances. Planning ahead not only provides peace of mind but also makes the asset distribution process smoother for your loved ones during a challenging time.