Does a Will Help to Avoid Probate?
Do you have questions about estate planning and probate? You are not alone. Understanding estate planning and probate can be tricky. Many people want to implement estate planning tools to help them avoid probate as it can be a notoriously long and expensive process. One mistake people make, however, is believing that having a will is enough to avoid going through probate.
When Does Probate Apply?
Your home and any other real property you own, your vehicles, bank accounts, investment and retirement accounts, cash value life insurance, and personal property, are all assets that can and will be inherited by someone else upon your passing. You can use a will to help ensure these assets are allocated as you would desire upon your death. If you have minor children, your will should also contain provisions for their care. A will is a set of instructions for your executor to use to carry out your wishes regarding what to do with all of the above. It does not, however, allow your executor to avoid probate. For that, you may need a trust.
If you leave an estate with assets under $50,000 in Maryland or $40,000 in the District of Columbia, an abbreviated probate process is available. Otherwise, your estate has to go through the full probate process unless the assets are in trust. In addition, using a trust allows you to do disability planning during lifetime. Trusts are, therefore, not solely for the very wealthy. This is a good reason for many people to set up a revocable trust.
How Do Revocable Trusts Work?
Revocable trusts can be changed at any time you wish prior to your death. You are allowed to act as the trustee for your own revocable trust and manage the assets during your lifetime. You will name a successor trustee who will manage or distribute the assets after your death. You can even include a provision in your will stating that any assets not contained in the trust that you own at your death will be placed into your revocable trust, so they avoid going through probate. These assets are “poured” into your trust, which is why it is sometimes called a “pour-over” trust provision. By doing this, the assets held in the trust can avoid probate. Your successor trustee can be the same person as your executor, and he or she can disburse the assets to your heirs as necessary. In general, it makes for a smoother path forward for your family after you pass away.
To learn more about how you can avoid probate, our office is here to help. Call the Law Offices of Clifford M. Cohen at (202) 895-2799 to schedule a time to meet.