The death of a family member can leave children or loved ones with not only tough decisions and mountains of paperwork but also a lengthy (and costly) legal process known as probate. To avoid that expensive headache, craft a thorough estate plan with the help of an experienced lawyer.
Unfortunately, many people think that estate planning is something that can be put off until later in life. In reality, unexpected events can happen at any time. Having a solid plan in place ensures that wishes are honored, the cost and hassle of settling one’s affairs are minimized, and loved ones are protected.
What is Probate?
Without proper planning, your home and other assets must go through probate, which can be a slow and expensive process.
Probate is the legal process in which a deceased person’s estate is administered and distributed in accordance with either their will or, in cases where there is no will present, in accordance with state law. It is a court-supervised process that identifies and values assets, pays outstanding debts and taxes, and determines the distribution of the remaining property to the rightful heirs. Without a plan in place, most or all of a person’s assets, including their home, must go through probate before being passed along to decedent’s heirs, which in most cases is family members.
“For most people, the world of probate is very foreign and can be extremely frustrating,” says Shawn Stogsdill, a local attorney specializing in a variety of practice areas, including estate planning and probate. “The process is slow, usually taking several months, and in Missouri or Kansas, probate can cost anywhere from $7,500–$10,000 for simple estates. And the more complicated it becomes, the more work attorneys must do and the more expensive it is.”
Some information discovered during the probate process becomes public record, and any delays and disputes that may arise between heirs can become extremely stressful. For an heir left with a home they want to sell, probate becomes a major delay that can potentially reduce the property’s value on the housing market and draw out the time it takes to sell the property.
Stogsdill recommends homeowners start estate planning sooner rather than later. “It is not mandatory, but a home is usually one of the most valuable assets you have,” he says. “It’s important to have a plan in place for what will happen to it in the case of your death.” Time and time again, though, homeowners wait until it is too late. Then their heirs are left to fight the probate battle on their own.
Estate Planning
Estate planning can be straightforward and cost-effective, helping you avoid probate and ensure your property goes where you want it.
Proper estate planning can help you bypass the probate process entirely, allowing for a smooth and quick transfer of assets. However, choosing the most appropriate estate planning method depends on one’s specific situation. The best person to speak to about which approach to take is an experienced estate planning attorney. “An estate planning attorney will be able to educate you throughout the process and explain what it will look like and what it is going to cost,” Stogsdill explains. “In short, they help make estate planning efficient and hassle-free.”
Many homeowners believe that estate planning will be difficult and expensive, when in fact, that is not the case. “Estate planning doesn’t have to be complex. Utilizing a beneficiary deed is simple and inexpensive,” says Stogsdill.
When meeting with an estate planning attorney, homeowners will need to have a firm idea of where they want their property to go upon their passing. For example, if a homeowner has multiple children, passing the home down to them equally can become difficult if one wants to sell and another wants to keep it. An estate planning attorney can help you navigate this situation and any others that may arise easily.
Below is a brief description of three of the most common estate planning approaches homeowners use:
1. Revocable Living Trusts
A living trust allows a property owner to place their home, as well as any other assets, such as bank accounts or investments, into a trust while, as the name implies, they are still alive. They are the trustee and are able to maintain full control of their assets to manage, sell, or use them until their passing. Because it is a revocable trust, the trustee has the flexibility to amend or cancel the trust at any time.
Upon the trustee’s death, the successor trustee then takes over the management of the trust. They can distribute the assets in it without having to go through the probate process. Heirs do not have to wait months or deal with complicated legal filings. Instead, they simply follow the instructions outlined in the trust.
2. Transfer-on-Death (TOD)/Beneficiary Deeds
This legal document functions similarly to a payable-on-death designation for bank accounts but applies specifically to property. The deed has no effect while the homeowner is living. They retain full ownership and can sell, refinance, or live in the home. Upon their death, the property is transferred directly to the named beneficiary without the involvement of probate. This is a relatively affordable option, but should still be completed with the assistance of a real estate attorney. This will help ensure everything is recorded accurately.
3. Joint Ownership with Right of Survivorship
This option is ideal for married couples or family members who wish to own a property together. Titles held this way are automatically passed to the surviving co-owner outside of probate. It’s very common for spouses to use this option for their primary residence. It is simple to set up and requires no special legal filings. The phrasing “right of survivorship” on the title is key because it prevents the property from becoming part of the deceased person’s probate estate. Talk with an attorney about whether this is the right option. It can become complicated, as any debts held by one of the owners may limit the ability to sell or refinance the house.
These are far from the only choices available when it comes to estate planning. The right approach completely depends on many personal factors, such as the value of the estate, the family dynamic, potential taxes, and more. The complexity of estate planning means that making the wrong choice can lead to unintended consequences.
Ellen always recommends working with an attorney like Shawn Stogsdill – (816) 421-0644, who helps clients weigh all their options, understand the state’s specific laws, and tailor a plan to perfectly fit the family’s needs.
