Arizona attorneys offer best ideas to avoid legal complications in probate court
The purpose of probate court is to determine how the assets and property of a deceased person will be distributed. Probate court is absolutely required in Arizona after a person passes away. If there is no will or trust established, however, the court will assign someone to make those decisions. This can be a painstaking and complicated process for grieving families.
Avoiding it is easy and only requires adequate planning, according to an article in the balance. Here are some simple methods to consider.
Getting rid of property
While this method of avoiding probate court may seem extreme, it could potentially prevent legal complications in the future. This can be accomplished either by gifting or selling valuable items, or including them in an irrevocable trust. Establishing an irrevocable trust can also safeguard your property from creditors and tax liability.
For any remaining assets, such as real estate, bank accounts, and investment accounts, it's important to establish a will or revocable trust.
Joint ownership with rights of survivorship or tenancy by the entirety
Probate court can also be avoided by adding a joint owner to your bank account or investment account. You may also add another party to your real estate deed.
If you are married, you and your spouse may own property with rights of survivorship in the form of tenancy by the entirety. It is important to understand the hurdle of joint ownership with rights of survivorship or tenancy by the entirety, however:
- Adding a joint owner to an account or deed is considered a taxable gift by the IRS. This means that it will need to be reported on IRS Form 709 when you file your taxes.
- In the event a joint owner is sued, a judgment creditor may be able to take assets from the joint account.
- If the other joint owner dies before you do, then around 50-100 percent of the assets in the joint account are included in the joint owner's estate for tax purposes.
- If you become divorced, your spouse may not distribute joint assets as you wish. For example, assets may be granted to the children of a new spouse rather than your own children.
Beneficiary designations
If you have life insurance or other assets held in a retirement account such an IRA, 401(k), or annuity, then you have what are called beneficiary designations. You may have designated beneficiaries on your bank or investment accounts who will receive the assets after you die. This also applies to real estate property. These are referred to as "payable on death" (POD) or "transfer on death" (TOD) accounts.
Titling assets in a revocable living trust
If you establish a revocable living trust, you can decide who will receive your assets and property after you die. Doing so can also be beneficial in the event you become mentally incapacitated.
In order to avoid legal complications in the future, it's important to title all assets and property in the name of your trust. Any assets that aren't included in your trust will need to be probated. In order to avoid this, they must be designated for specific beneficiaries.
Consult with an attorney
Being prepared can help save your loved ones complicated legal troubles in the future. The best time to get started is now and the best way to do so is to consult with an attorney who can help you navigate this complex legal process. We can help you explore estate planning options that best suit the needs of you and your family.
Contact the Law Firm of Brown & Jensen today to schedule a free consultation with our experienced and knowledgeable legal team.