When you think about what will happen when you are gone, the last thing you probably want to imagine is your loved ones fighting over your estate or your estate documents. Yet, you won’t be here, so there is nothing you can do about that, right? Well, actually, there are things that you can do, to avoid a contested estate.
Early Transfers Can Help
The key to avoiding contests and arguments is to make transfers now, while you are still here. By transferring assets into certain estate planning vehicles now, you can avoid the probate process altogether, and thus, avoid a contested estate.
One thing that can be done is to transfer assets into a trust, now called a living trust. There are multiple kinds of living trusts. A benefit of particular note for all of them is that the transfer while you are still alive. Then, when you pass, that property does not go through the probating process. It has already been transferred. Thus, there is nothing for beneficiaries to fight about.
Payable on Death Accounts
Money in bank accounts may be able to avoid the probate process if they are what is known as a payable on death account. You simply designate who will be the beneficiary of the account with the financial institution. You can do the same thing with stocks, mutual funds, or other investments.
The same holds true for proceeds of insurance, such as life insurance, which will go to whoever the designated beneficiary is in the policy.
Proceeds of retirement accounts also avoid probating, as they will simply go to whoever the stated designee or beneficiary may be. This includes Roth IRAs, 401(k)s, or health savings accounts. However, this is if the decedent has not named his or her beneficiary as the estate. In other words, these proceeds need to go to someone else, and the designation must happen before you pass.
In Illinois, if you pass and you have a spouse, your spouse will receive any property that you owned jointly, without any court action needed. However, this can be altered or amended by a will or other estate documents.
Using Common Sense
Aside from the legal aspects of the property that can avoid a contested estate, are the practical considerations. There are some common-sense things that you can do, to avoid disputes over your property.
The first is to transfer property or create estate documents now, when you are healthy, and when it is unlikely that anybody would question your mental capacity to make decisions about your own property.
Another thing you can do is to use a qualified estate attorney, who is neutral. In other words, using friends, family, or business associates to help you transfer property or change named beneficiaries, tends to invite challenges to people’s estate.
Lastly, simple communication to those beneficiaries who may be getting less than what they expect can help minimize the chances of a contested estate later on.
Questions about your estate? Call the Lincolnshire estate planning attorneys at Orlowsky & Wilson, Ltd at 847-325-5559 to learn more.