“Will my estate need to go through probate?” This is a question that we often hear in our office. Many people have had a bad experience with probate and worry about how their own heirs will be treated when their own estate is eventually probated. While probate administration typically takes a little longer and can be a bit more expensive than trust administration, it is not a terrible thing. Creditors get paid, heirs still receive their gifts, and property passes down from one generation to the next. Fortunately, there are some easy steps you can take to make sure your own estate’s probate is an orderly process.
Prepare for Business Succession
If you own your own business and it has been around for more than two or three years, you know how hard you have worked at it and how much effort it takes to keep it running. If you want that business to continue into the next generation, then make sure you have taken appropriate steps. Engage a qualified attorney to draft a buy-sell agreement to define what will happen after your lifetime or even if you should become disabled and are no longer able to work. Prepare annual minutes for your company to show that it really is running as a business and not just an extension of you personally. Issue shares to show ownership of the company. Even if you are the only owner and a buy-sell is not needed, make sure you have clearly indicated who should receive the shares of the company after your lifetime.
Plan for Out-Of-State or Low Value Assets
Do you own real estate outside of Florida? Outside of the United States? From a probate perspective, if you are a Florida resident then any real estate owned outside our borders is considered foreign and may need expensive proceedings to address them. Setting the assets up to pass more easily to others may be very simple, if it is dealt with during your lifetime. Speak to an attorney in the jurisdiction where the property is located and ask what you can do to facilitate the transfer. Whatever you spend to do it now will almost certainly be less than what your heirs would spend later.
Make Proper Plans for Life Insurance
Life insurance is usually paid outside of the probate process and life insurance proceeds are not subject to claims from your creditors. However, if you had named someone as beneficiary of your policy, that person died before you and you never named another beneficiary, the proceeds would be paid to your estate and would be subject to your creditors. This is a very easy problem to fix. To do so, just get in touch with your insurance agent, review your beneficiary designations, and make changes as needed. While doing that, make sure you don’t designate someone to receive death benefits that you really want to be there for someone else. In other words, don’t make your mother the beneficiary of a policy that you have in place to take care of your kids. If your mother is incapacitated when the death benefit is paid and a guardian is in place, that guardian would have a duty to spend the funds on your mother, not your kids. This is where a trust would be useful to address your needs.
I started out by saying that avoiding probate problems is easy if you know what you’re doing. Of course, probate planning is not an endeavor for the casual or occasional practitioner and there are many more things to be considered. Seek out a qualified estate planning attorney to assist you with your own affairs and make sure to communicate the things you are concerned about so that your plan will be properly prepared and administered.