Do you have an estate plan and think that is enough to avoid probate? You might want to think again. Many people are under the impression that because they have a carefully written will, or because they do not have large investment accounts, their estates will not have to go through the probate process. This is not always true. Let us discuss 3 common estate planning mistakes we see that mean your estate will have to go through probate.
1. Thinking a Will is All It Takes. Having a will can be a wonderful idea. It can be important to take steps to ensure that your wishes as to what happens to your estate after you pass away are carefully laid out in a legal manner so that your personal representative can carry them out without issue. A will, however, acts more like a set of instructions for your personal representative as to the proper distribution of your estate. Your personal representative will still have to “probate” the will, which involves bringing it for review by the probate court in your area, and the judge of that court will have final discretion to decide whether it has been properly executed. Having a will does not exempt your estate from probate.
2. Thinking Your Estate is Too Small. Every state has a different threshold for probate. Some require an estate to go through probate with assets valued at over $150,000. Others set the bar at only $20,000. Almost all states require probate if you owned a home at the time of your death, even if you had very little left in your bank account. It can be a mistake to believe that if you are not a millionaire, your estate will not be subject to probate.
3. You Designated Beneficiaries for Your Accounts. Many people believe that designating a beneficiary on an account allows that account to avoid probate. This, however, may only apply to “payable on death” (POD) accounts. All other accounts, including regular bank accounts, will likely go through probate.
If you are interested in learning more about methods of estate planning that allow you to avoid probate, such as putting your assets into a trust, contact our firm today.