The probate process begins after death and is the process of distributing a person’s estate. Even if there was a will the probate process still happens. The length of time probate takes can vary depending on state, but with COVID-19 slowing down processes it is taking upwards of six months in most states. Probate can also be an expensive process for people if they choose to hire a probate attorney to walk them through the process. However, there are ways to avoid this time consuming and expensive process. Avoiding probate could allow beneficiaries and heirs to gain access to their inheritance quicker.
A living trust is one way to work around the probate process. Living Trusts are similar to wills in the sense that they detail how an estate should be divided, but living trusts are valid before death. The purpose of a living trust is to allow an easy transfer of assets through bypassing the legal process of probate. The creator of the living trust would still have control over the property but would name a successor(s) to take over control once they die.
Disadvantages of a Living Trust
While living trusts come with the advantage of skipping probate, there are disadvantages as well. There is a cost associated with living trusts, which could be lower or similar to probate court fees. Trusts can also be more complex to draft when compared to wills and there are no tax advantages to having a living trust. While a living trust is supposed to expedite the process of beneficiaries receiving their inheritance, this option could be time consuming if the beneficiary has to make repeated requests through the trustee for their inheritance.
Transfer on Death Deed
A transfer on death deed (TODD) is another way that the probate process can be avoided. This option is a simple and inexpensive way to ensure an estate is passed on to the beneficiary when the primary asset of the estate is real estate. A TODD can designate ownership of an asset to an heir which would then be transferred to the beneficiary upon death. The benefits of a TODD include: the option to void the document at any time before death, the heirs avoiding probate, any tax benefits of keeping the home, and little risk involved.
“A TODD can be a great way to help avoid probate while also gaining additional benefits” said Attorney Paul Romano of Romano & Sumner. “A TODD is a low-risk way to pass an estate to a beneficiary, but it doesn’t come without its downsides. If you are considering a TODD for your estate planning needs, an estate planning lawyer can help you evaluate this option and determine if it’s right for you.”
Disadvantages of a Transfer on Death Deed
While a transfer on death deed is a viable option for ensuring heirs get their inheritance in a timely and inexpensive manner, there are disadvantages. This can include the requirement for proof of ownership before creating a TODD. Also, if a person becomes incapacitated or is not of sound mind, they cannot revoke the TODD. A spouse that is not on the TODD would also have no legal claim to the to the portion of the property belonging to the deceased spouse.
The “Best” Solution
While there is no single best way to save your heirs time and money when it comes to gaining access to their inheritance, the best solution is to explore all your options with an attorney. Every estate is different, so what works for one family might not work for you. Contact an attorney today to see what options would be viable for you.