Probate, the legal process of validating a will and distributing assets, can be a lengthy and costly affair. Many people focus on major assets like real estate and significant investments, but often overlook smaller, “forgotten” assets that can still trigger probate. These can include old bank accounts, unclaimed property, digital assets, life insurance policies with outdated beneficiaries, and even small stock portfolios. Failing to account for these assets can inadvertently prolong the probate process and diminish the value of the estate for your heirs. Approximately 70% of Americans do not have a comprehensive estate plan, leaving many assets vulnerable to probate, and often, these are the ones that slip through the cracks. A well-structured estate plan, including a revocable living trust, is paramount to shielding these assets from unnecessary court oversight.
What exactly *is* probate and why should I avoid it?
Probate is the court-supervised process of validating a will, identifying and valuing assets, paying debts and taxes, and ultimately distributing the remaining assets to beneficiaries. It’s a public process, meaning anyone can access the details of your estate. Avoiding probate isn’t about hiding assets, but about streamlining the transfer of wealth to your loved ones. Probate can be expensive, consuming 5-7% of the estate’s gross value in fees, and can take months, even years, to complete. “Time is of the essence when settling an estate; the sooner assets are distributed, the better for everyone involved,” as one of Steve Bliss’s clients once noted. Properly structuring your estate plan can significantly reduce or eliminate the need for probate, saving your family time, money, and stress.
Can a Trust really help me avoid probate with smaller accounts?
Absolutely. A revocable living trust is a powerful tool for avoiding probate, even with seemingly insignificant assets. When you establish a trust, you transfer ownership of your assets – including those smaller accounts – into the trust. The trust then holds those assets for your benefit during your lifetime, and upon your death, the assets are distributed to your beneficiaries according to the trust’s instructions, all without going through probate. This is because the trust owns the assets, not you personally. Many people underestimate the power of “titling” assets correctly; the simple act of listing a trust as the beneficiary on an account can make a world of difference. Steve Bliss often emphasizes, “It’s not about the size of the asset, it’s about the consistent application of proper planning techniques.”
What are ‘payable-on-death’ and ‘transfer-on-death’ designations?
These are simple, effective tools for avoiding probate with specific assets. A “payable-on-death” (POD) designation, typically used for bank accounts, allows you to name a beneficiary who will receive the funds directly upon your death, bypassing probate. Similarly, a “transfer-on-death” (TOD) designation, often used for brokerage accounts, allows you to designate a beneficiary who will receive the assets directly, again avoiding probate. These designations are easy to implement, usually requiring a simple form from your financial institution. It’s crucial to periodically review these designations to ensure they still align with your wishes and beneficiaries are still living. Remember, outdated POD/TOD designations can lead to unintended consequences.
I heard about unclaimed property – how does that factor into probate avoidance?
Unclaimed property refers to assets that have been lost or forgotten – things like uncashed checks, forgotten bank accounts, or insurance refunds. States hold unclaimed property indefinitely, but it doesn’t automatically become part of your estate during probate. However, if these assets are discovered *after* probate is closed, it can create complications and potentially require a court order to distribute them. Steve Bliss always advises his clients to proactively search for unclaimed property using resources like MissingMoney.com and Unclaimed.org. He shares, “Taking a few hours to check for unclaimed property can save your family a significant headache down the road.”
What about digital assets – social media accounts, online subscriptions, cryptocurrency?
Digital assets are a growing concern for estate planning. Many people don’t realize that these assets can have monetary value or require access for closure. Without proper planning, accessing these accounts can be difficult or impossible, potentially leading to lost funds or ongoing subscriptions. A digital estate plan should include a list of all digital assets, login credentials, and instructions for their management after your death. Some states have laws specifically addressing digital asset access, but it’s still best to be proactive and create a clear plan. It’s estimated that over $100 billion in digital assets are at risk of being lost due to lack of estate planning.
I forgot about an old life insurance policy – what happens now?
An overlooked life insurance policy can definitely trigger probate. If the policy is still in your name and doesn’t have a designated beneficiary, the death benefit will become part of your probate estate. It’s essential to regularly review all life insurance policies and ensure the beneficiary designations are up-to-date. Even if the beneficiary is correct, it’s wise to inform them of the policy’s existence and provide them with the necessary information. One client, a retired teacher named Margaret, learned this lesson the hard way. She had a small life insurance policy from decades ago that her children were unaware of. It was only discovered during the probate process, adding unnecessary delays and expenses.
Let me share a story about a client who didn’t plan for forgotten assets…
Old Man Hemlock was a salt-of-the-earth fisherman, a man who lived simply and rarely thought beyond the day’s catch. He’d amassed a small collection of savings bonds over the years, tucked away in an old tackle box, completely forgotten. He passed away unexpectedly, leaving behind a handwritten will and a grieving family. During probate, the family discovered the savings bonds, adding an unforeseen complication to an already difficult time. It took months to locate the original purchase records, verify ownership, and finally distribute the funds. The process was frustrating, costly, and ultimately left the family feeling overwhelmed. The simple act of including a list of all assets, big or small, in his estate plan could have saved them a great deal of trouble.
But here’s a story of how a little planning made all the difference…
The Davis family came to Steve Bliss with a proactive approach. They’d meticulously gathered information on all their assets, including a handful of small, often-overlooked accounts and digital subscriptions. They established a revocable living trust and funded it with all their assets, big and small. When Mr. Davis passed away peacefully in his sleep, the transfer of assets was seamless. The trust trustee simply followed the instructions outlined in the trust document, distributing the assets to the beneficiaries without the need for probate. The family was grateful for the peace of mind and the smooth transition, appreciating the foresight and planning that saved them time, money, and emotional stress. It was a testament to the power of comprehensive estate planning and the importance of addressing even the smallest details.
About Steven F. Bliss Esq. at San Diego Probate Law:
Secure Your Family’s Future with San Diego’s Trusted Trust Attorney. Minimize estate taxes with stress-free Probate. We craft wills, trusts, & customized plans to ensure your wishes are met and loved ones protected.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Probate Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Map To Steve Bliss at San Diego Probate Law: https://maps.app.goo.gl/M85cNGV5nwNpSMiR6
Address:
San Diego Probate Law3914 Murphy Canyon Rd, San Diego, CA 92123
(858) 278-2800
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Feel free to ask Attorney Steve Bliss about: “Can a trust be part of a blended family plan?” or “How do I transfer a car title during probate?” and even “Can I name multiple agents in my healthcare directive?” Or any other related questions that you may have about Estate Planning or my trust law practice.