Probate Avoidance Strategies

              Probate is a court-supervised proceeding where a person’s Last Will and Testament is enforced and administered at the time of death. Since it is a court-supervised process, it can be quite expensive (up to 6 percent of the estate value) and time consuming (minimum of 6 months in Arkansas). Based on these issues, most seniors attempt to avoid having their estate pass through probate. Estate planning often focuses on probate avoidance.  

    The best probate avoidance plan is a Revocable Living Trust. Trusts are the most popular estate planning document primarily because they avoid probate while at the same time thoroughly addressing all issues that can come up in administering an estate at death. A Trust is simply an agreement that not only controls your assets while you are alive (with you serving as your own Trustee and remaining in full control), but also controls the disposition of your assets at death (much like your will would).

    Some attempt to avoid probate by other means, most commonly through joint accounts, payable on death accounts (POD) and transfer on death accounts (TOD). A Joint account is when a child or other beneficiary is named as a joint owner. POD  and TOD accounts designate a beneficiary at death and are available for most bank accounts. POD and TOD accounts simply distribute the funds outright to the named beneficiary with no other contingency plans. The problem with these planning strategies is that they do not plan for the “what ifs” in life, such as the prior death of a named beneficiary or one who has financial or personal problems. They also do not require the payment of your final expenses such as a funeral. Joint accounts create an additional risk in that the named joint account owner is an owner of your account, thereby subjecting the assets in the account to their creditor and marital claims. Therefore, they’re strongly discouraged. In the event that a family member needs access to your accounts because of incapacity, your estate plan should have a Power of Attorney to allow such access for your benefit. 
    
    Some of these “shortcut” strategies often have poor results and end up costing more in legal fees to clean up. Further, based on unintended consequences as a result of such strategies, your family may end up in conflict with one another over what your true intentions were. If you or a loved one are interested in avoiding probate, please contact the Davidson Law Firm for more information at 501-374-9977 or by email at
skipd@dlf-ar.com.

— This article was contributed by the Hot Springs Sentinel–Record Senior Scene.                       2016   

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