Many people hear bits and pieces about the estate planning process and they make assumptions based on incomplete information. This enters the picture when it comes to the administration process and the legal procedure called probate.
Generally speaking, postmortem asset transfers are subject to this court-supervised process, but there are certain types of transfers that do not go through probate. We will provide clarity in this post.
Simplified Probate Procedure
In the state of New York, there is a simplified probate procedure for smaller estates. If the value of an estate does not exceed $30,000 and there is no real estate, the court can be petitioned to approve this streamlined process.
Full Probate Overview
When a will is used as an asset transfer vehicle, the executor that is named in the document acts as the administrator. After the death of the testator, the will is admitted to probate, and the court provides supervision during the estate administration process.
The appropriate agencies are notified about the passing of the testator, and creditors are given time to come forward seeking satisfaction. Assets are identified by the executor, and they are inventoried and prepared for distribution.
There is a proving of the will during probate. The court examines the will to determine its validity, and if anyone wants to challenge the will, they can come forward to present an argument.
Probate serves a purpose, but it creates hassles for the rightful heirs to an estate. The time consumption is one of them, because inheritances are not distributed until the estate has been probate and closed by the court.
There are innumerable expenses that accumulate, and the red ink reduces the value of the estate before it is distributed among the heirs. Plus, interested parties can access the publicly available probate records to dig into the details, so there is a loss of privacy.
Probate-Free Asset Transfers
Some types of asset transfers are not subject to probate, even if the person in question has a will. If you have a life insurance policy on your life, the company would remit the proceeds to the beneficiary, and the probate court would play no role in the transfer.
When you open up an account at a bank or brokerage, you can name a beneficiary. This is called a payable on death or transfer on death account. After your passing, the beneficiary would present the death certificate to the institution, and the assets would be released outside of probate.
If you own real property, you can add someone else to the title, and they would become a joint tenant. The condition of joint tenancy can also arise when multiple people purchase property together. Married couples often create joint tenancies when they purchase their homes.
It should be noted that joint tenancy does not strictly apply to real estate; bank accounts, brokerage accounts, and other property can be held in joint tenancy.
Proactive Probate Avoidance
There are drawbacks and limitations that go along with the utilization of the above methods to intentionally avoid probate. If you want to facilitate transfers outside of probate, you should consider the creation of a revocable living trust.
As the name would indicate, you would retain the power of revocation, so there would be no risks on that level. You would act as the trustee while you are living, so you would have absolute control of the assets in the trust.
After your passing, a successor trustee that you name in the document would distribute assets to the beneficiaries outside of the costly and time-consuming process of probate. This is one benefit that living trusts provide, but there are others that we will look at in a future post.
Take Action Today!
If you are going through life without an estate plan, action is required. A living trust can be the ideal estate plan centerpiece, but there are other tools in the estate planning toolkit.
The right approach will depend upon the circumstances, and that’s why personalized attention is key. This is exactly what you receive when you choose our firm.
You can set up a consultation appointment right now if you call us at 212-973-0100, and you can fill out our contact form if you would like to send us a message.
While he was in law school, he worked as an aide to the late John Sparkman, Senior Senator from Alabama. This gave him the opportunity to gain intimate knowledge of the workings of government, and this background has served him well.
He started his private practice in New York in 1974, the first Sikh to be admitted to the bar in the state of New York.And in 1995, when he narrowed his legal focus to the areas of estate planning and elder law, the prestigious American Academy of Estate Planning Attorneys accepted him into their membership.
Special needs planning is an important aspect of the field, and Mr. Khalsa has intertwined his empathy with his expertise to become a leading advocate in this area. Shortly after the Education for All Handicapped Children Act was enacted in 1975, he won the first case in New York that was adjudicated under this law.
S.J. Khalsa has a penchant for philanthropy, and he has raised well over $20 million for charities nationwide. He is a deeply spiritual man who represents the Sikh religion at religious and interfaith gatherings all over the globe.
He believes that successful professionals should contribute to the fabric of their communities, and to this end, he works with law enforcement in New York.
Mr. Khalsa is a graduate of the FBI Citizens Academy program, and he is active in their Alumni Association. He is a member of the FBI/New York Police Department Joint Task Forces on Civil Rights and Hate Crimes, and he sits on the Community Engagement Council that advises the FBI Assistant Director for New York.
He is the author of the highly acclaimed book, Estate Planning Essentials: A Guidebook for Modern Families. Lawyers of Distinction recognized him for his excellence in 2020, naming him a 2020 Power Lawyer, and he is a member of the prestigious American Academy of Estate Planning Attorneys.
Mr. Khalsa lives in Manhattan with his wife, and he has two grown children and four grandchildren. He likes to travel, and he is an avid golfer. As the co-owner of Kundalini Yoga East in New York along with his wife, he instructs practitioners and aspiring yoga teachers.
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