Creating an estate plan is essential to managing your assets after you pass away or become incapacitated. Wills, a power of attorney and advanced healthcare directives provide peace of mind for you and your loved ones.
Still, without certain provisions, your entire estate must undergo probate after you die. What can you do now to ensure your assets get passed on to your heirs?
What is probate?
Probate is a legal process that involves authenticating the deceased person’s will, identifying and inventorying assets, paying off debts and taxes, and distributing the remainder as dictated by the will. This can be both time-consuming and costly. Furthermore, probated wills become public records that anyone can view. For these reasons, some people choose to use strategies to avoid probate.
One of the easiest ways to avoid probate is through joint ownership with rights of survivorship. When you die, the property automatically passes to the surviving owner. Another common tactic for avoiding probate is naming beneficiaries to certain assets, such as life insurance policies, investments and retirement accounts.
Pennsylvania allows you to transfer some items to another person by converting them to transfer-on-death (TOD) accounts. Upon your death, the assets are transferred directly to the named beneficiaries. However, TODs can only be used for certain assets, like bank accounts. Pennsylvania does not allow you to create transfer-on-death deeds for real estate.
Creating a revocable living trust is one of the most flexible and comprehensive ways to avoid probate. All your property is transferred into the trust, which a trustee handles. Upon your death, all remaining assets go directly to the beneficiaries that you named in the trust.
Pennsylvania has many rules and regulations regarding handling your property after you die. You should discuss your goals with someone who can help you strategize and create a plan that best meets your needs.