As you near your retirement years, it’s a good idea to start considering your estate planning options. For many of us, the legacy we leave to our spouse, children, grandchildren and great-grandchildren matters enormously, so it’s important that your estate plans ensure your surviving loved ones receive the most out of their inheritance. One of the best ways to do that is to avoid the time and costs involved in probate court.
Probate is the traditional legal proceedings that occur after a person dies. The process includes everything from validating the deceased person’s will to appraising their property, paying debts and taxes and distributing their property to beneficiaries. According to Lonette Bentley, Executive Director at Clarity Pointe™ Pensacola, a memory care community in Pensacola, Florida, probate court can cost families a great deal of money and frustration.
“Probate court can tie up a person’s property and assets for months – or even a year,” explains Bentley. “Not only that, but it’s expensive! With the addition of court and attorney fees, families could easily spend close to five percent of what their inheritance is worth over a long period of legal processes. If your family is in need of these funds to pay for health care needs, the wait could be even more costly.”
It’s no wonder that seniors look for options that avoid the hassle of probate if they can (for further convincing, check out these statistics). Fortunately, for seniors who plan carefully, there are several ways to get around probate.
How to Avoid Probate and It’s Problems
According to Nolo.com® (one of the top online legal resources for those of us without a law degree), it’s wise to limit the amount of property that goes through probate – or avoid probate altogether – when you’re considering your estate plans.
You can avoid probate by how you distribute your property and assets. When you draw up your estate plans, consider the following options to protect your property and its future owners from probate’s costs and frustrations:
A Revocable Living Trust – When you put your property into a living trust, it avoids probate because it technically no longer belongs to you – it belongs to the trustee. After your death, the trustee that you chose can easily transfer the trust property to the family and friends you left it to, without having to send it through probate.
When you set up a living trust (learn more about trusts in our previous post), you will clearly state the trustee who will be in control of the property and who should receive it once you die. A revocable living trust is convenient if you think you may want to change beneficiaries later on. Otherwise, with an irrevocable trust, the beneficiaries you choose at the trust’s creation cannot be changed.
Payable-On-Death Accounts – You can also avoid probate by converting your bank accounts and retirement accounts into payable-on-death or transfer-on-death accounts. This allows you to name a beneficiary to receive the funds in the account. After your death, these accounts will automatically transfer to your beneficiary without needing to go through probate.
Some states also allow you to convert real estate deeds and vehicle registrations to payable-on-death registrations. This is a simple way to enjoy your property while you are living, and easily pass it on to your loved one after your death.
Gifts – If you would rather pass down your property to your loved ones while you’re alive, you can simply gift it to them. Since gifted items no longer belong to you, probate is no longer a concern. Plus, most gifts are not subject to the federal gift tax, as long as they fall within certain standards.
Giving away your property while you’re alive not only allows you to personally pass it down, sharing it with a loved one and witnessing their reaction, but it gives you the opportunity to be creative with your giving. Consider some of the different options for giving significant gifts to your loved ones:
- Direct gifts – You can give up to $14,000 per recipient, per year, to as many people as you like without having to pay a gift tax.
- Medical or Tuition Expenses – Pay directly for someone’s medical bills, college tuition or student loans.
- College Savings – If you have young grandchildren or great-grandchildren, put money into a Section 529 savings plan or CD for future college expenses.
- Rent-Free Living – If you move to a retirement community or downsize to a smaller home, allow family to live in your previous house rent-free.
- Scholarship Funds – Consider funding a scholarship at your alma mater.
- Donations to Charity – You can give however much you want to the charity of your choice.
- Heirlooms – With non-monetary gifts, passing down important or valuable items can be a meaningful experience for both you and the recipient.
Here to Help with Your Planning Options
If you would like more information about estate planning or probate costs, feel free to reach out to Clarity Pointe Pensacola for guidance. Our experienced team can help you find information and connect you to valuable resources throughout the community. If you are looking for help on making plans for a loved one with memory loss, we can help you with that, too. We’re happy to assist you and your loved ones with any of your senior living and memory care needs.
Clarity Pointe … Our Difference is Clear
Clarity Pointe’s™ Specialized Memory Care “Living” Neighborhoods are truly changing lives for those with Alzheimer’s disease and other dementias – and for those who love them. At Clarity Pointe, our mission is to ensure our residents lead connected and rewarding lives.
Unlike other providers that offer a secure memory care wing in a skilled nursing or assisted living center, Clarity Pointe Pensacola offers three free-standing, purpose-built memory care communities that are solely and entirely dedicated to memory care assisted living. Our communities blend luxurious surroundings with specialized care that is individualized to each resident and delivered by a compassionate, expert team of professionals.
We stay current on the latest trends and advancements in Alzheimer’s care and implement them into our residents’ care plans. Always moving forward, we combine the latest in evidence-based programming with luxurious, residential living and compassionate respectful care.
For each of our residents, we offer a life that is engaging, fulfilling, inspiring and meaningful.