“In this world, nothing can be certain, except death and taxes.”
Benjamin Franklin’s words are just as true today as they were when spoken more than 200 years ago. While none of us want to think about our own mortality, no one lives forever. Failing to undertake appropriate planning for your estate can cause your family to have to go through the expensive and drawn out process of probate.
We owe it to our families and loved ones to plan responsibly to for the inevitable. Here at Kennelly Business Law, our team of experienced attorneys knows the right steps to take to make sure your family has peace of mind during such a challenging time.
Here are some tools our team can take to avoid probates:
- Revocable Living Trusts (RLT): RLTs are a popular tool used to avoid probate and work by transferring all of a client’s assets (house, bank accounts, vehicles, etc.) into the RLT. Even though the assets are in the trust, the client can do what they choose with the assets, including sell, mortgage, transfer, or otherwise dispose of them. At the time of passing, the trust dictates how the assets are transferred.
- Life Estates: This option involves an individual gifting their real estate to their children while maintaining control over the property while they are alive. This is a great tool for elderly clients with real estate with which that they don’t want to part ways, such as a farm or lake cabin. The big benefit of a life estate deed is that after a 5 year look back period, the asset can’t be counted against the estate by a nursing home for payment. That means the real estate can be protected against a forced sale to pay for the nursing home care. The drawback to this approach is that since the real estate has been transferred to the child, the client can’t sell the asset, should they choose.
- Transfer on Death Deed (TOD): a TOD deed is similar to a life estate deed in that it passes the real estate asset to heirs without having to go through probate. The benefit of a TOD Deed is that the client maintains ownership of the property and is free to sell, encumber, or otherwise transfer the property while alive, unlike the life estate. The drawback is that the real estate remains in the client’s estate so is an asset that can be used to pay for nursing homes.
- Listing Beneficiaries on financial accounts: One of the most important – and easiest – tactics clients can undertake is to list Pay on Death Beneficiaries on all financial accounts (bank, savings, 401k, life insurance, CDs, etc.). At death, these assets pass through to the beneficiaries without having to through probate, and the listed beneficiaries can be changed at any time.
These tools are all important to consider in estate planning, but every client and situation is unique. Contact Kennelly Business Law’s Estate Planning lead, Jeff Gunkelman, at firstname.lastname@example.org or any of our team members at 701.478.4900 today to learn more!