You’re planning to retire, but chances are one topic you haven’t thought much about is probate. Who would, when they’re planning to enjoy their life? It’s important to think about probate because the process is costly: in some states, attorney and court costs could consume thousands of dollars — up to 5% of an estate’s value. Probate also takes time: it can tie funds and property up in court for more than a year.

Fortunately, avoiding probate is easy to include as a step in good retirement income planning. We’ve put together three top ways to avoid the probate process, saving you and your loved ones time and money.

Create a Living Trust

The most common, straightforward way to avoid probate is to create a living trust. An alternative to a Last Will and Testament, a living trust is a document that places your assets in trust. Sometimes living trusts are called “revocable living trusts.” This means that you can change or revoke the trust at any time during your life. After you die, the trust becomes irrevocable.

Living trusts cover three phases of your life: what happens during your normal, healthy lifetime, what happens if you are permanently incapacitated for any reason, and what happens after death. Usually the trust maker (you) will be the trustee who decides how the assets are handled.

Living trusts do not go through probate. If you place your assets into a living trust and specified beneficiaries (just as with a Last Will), the funds are distributed to them after you die.

Establish Joint Tenancy with Right of Survivorship

If you own real estate, you know that the property can automatically pass to your spouse or other loved one if you have joint tenancy on the deed with right of survivorship. The right of survivorship means that if one or the other owner on the deed dies, the equity in the property will automatically pass to the other owner. Property of this type will not go through probate. Another term for this type of tenancy is “concurrent estate.”

Other forms of property ownership that can avoid probate include Tenancy by the Entirety (a related, separate type of joint tenancy). If you live in a Community Property state like Texas, California, or Wisconsin, you can also designate your property to be co-owned with survivorship rights.

Name Beneficiaries on Retirement, Investment, Insurance, and Bank Accounts

pre retirement financial planning seminar will cover the importance of naming beneficiaries on not only your bank accounts, but also your investments, insurance and annuities, and retirement accounts. You can and should designate a beneficiary on every financial account that you have. In case of your death, the assets will be automatically dispersed at your death without going through probate.

The estate of a person with $400,000 in assets who didn’t take these steps could end up paying as much as $20,000 in probate costs. A pre-retirement financial planning workshop or retirement financial planning workshop will help you avoid probate and enjoy your retirement income worry-free.


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