A common concern for people who meet with a Tampa estate planning lawyer for the first time is the desire to avoid probate. Perhaps they’ve been through the process after the loss of a loved one and they now want to take steps to help their own family avoid the legal costs, administrative headaches, and significant delays before their heirs can receive their inheritance.
There are several ways to help people plan their estate in such a way that their loved ones stay out of probate court. Creating a trust is the gold standard for probate avoidance. But, for those who do not create a trust for whatever reason, there are other probate avoidance strategies that can be used, such as naming joint owners on accounts and taking advantage of beneficiary designations when possible. However, we strongly recommend that these strategies are implemented under the supervision of an experienced estate planning lawyer since there can be many unforeseen risks of such actions.
What is Joint-Ownership?
In regard to probate, there are two types of ownership: sole and joint. Solely-held property must go through the probate process since it can’t legally be claimed by someone without a court order. Jointly-held property, on the other hand, does not have to go through probate because the joint-owner of the account has full ownership if the other owner dies. While this seems simple enough, many experienced probate attorneys stress to their clients that once a joint owner is named to an account, that account is now the legal property of that person; in other words, that person can spend money out of the account as he or she sees fit. Additionally, the account is also fair game for creditors, as they will not see the distinction of who actually put money in the joint account. Also, keep in mind that when a joint owner passes away, the account will then be solely-held – and subject to probate – until another joint owner is named to the account.
How Do Beneficiary Designations Work?
Beneficiary designations on financial accounts and insurance policies are a good way to make sure that those accounts pass to heirs without going through the probate process. However, it’s not always a fool-proof strategy. For example, if a person names a minor as the beneficiary of a financial account and then passes away, the minor cannot receive the assets free and clear. Instead, an adult guardian must manage the distributions. Alternatively, we’ve seen far too many cases where people fail to update their beneficiary designations, such as after a divorce, and the assets wind up in the hands of an ex-spouse. Sometimes, the beneficiary dies before the account holder, and the account ultimately winds up in probate court in the end because there is no living beneficiary named.
If your goal is to avoid probate, the best thing you can do is talk to an experienced probate attorney to weigh the pros and cons of the options available to you. If you would like assistance, we invite you to contact our office at (813) 438-8503 to set up a consultation with a Tampa estate planning lawyer.