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If you are over a certain age you probably receive routine cards in the mail inviting you to the local hotel for a free chicken dinner and a seminar on how to avoid probate via a living trust. These instruments are pushed, often by sales people who are not attorneys, mainly because they are lucrative. Proceed with caution.
When I work with clients I use trusts only when the fit the situation and I feel the client has the sophistication to manage the inevitable tax issues that will develop. Most people do not want the hassles associated with trusts, but want to avoid probate. If so, our conversation centers around the use of:
- Transfer on Death Deed for real estate. Not all states have this option, but we do in Wisconsin. It is a label placed on a deed that states who should inherit the property upon the owners death. Probate is avoided, and a small filing fee is paid to the register of deeds. It does not fit all situations, but it appealing for many clients;
- Pay on Death Cards. Available for bank or credit union accounts, it is a label you can put on bank accounts that gives the remaining funds to the person(s) upon your death. Transfer can happen with a few deaths, and usually requires submission of a death certificate. Again, because the asset had a label, it avoids probate.
- Beneficiary forms. Associated with retirement accounts and life insurance, these forms direct the distribution of assets upon the death of the owner. No probate is required. Transfers happen very quickly, usually within a few weeks.
While these are appealing because they avoid probate, it is important that the owner make sure the labels they've put on property (as those discussed above) are always up to date. Why? If an ex-spouse, former boyfriend/girlfriend, etc. is listed, but a will directs property to another person, the label controls. Not the will. When there is a label, the label trumps the will.
Remember, a blog is not legal advice. It is essential that you consult with an attorney in your state for advice on your specific situation. Thanks for reading, and I hope this post has given you some good things to investigate.