3 Tips to Help Clients Avoid Probate

Nov 16, 2018 6:00:00 AM

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There are many reasons to help clients avoid probate—it’s costly and time-consuming, not to mention it has the potential to make a public spectacle of a very private matter. More often than not, probate disputes can arise in response to unequal treatment of siblings and other close family members in an individual’s estate plan. Since the loss of a loved one already spikes heightened emotions, adding the uncertainty of what their loved one’s estate was worth, who is playing what role in the administration of their will, and who inheriting what assets can easily aggravate old family divisions, provoking costly family feuds in probate court.

In addition to this uncertainty, family dynamics can also play a role in the contesting of a client’s estate plan. This is particularly true for blended families, where biological relatives may feel more entitled to inherit a decedent’s estate over stepfamily members. Probate fights can also be ignited by differing familial relationships. For example, if a sibling feels that their “favored” sibling who has been chosen to administer their parent’s will is not fulfilling their obligations to the other beneficiaries.

1. Discuss their estate plans with their close family members

Clients may be hesitant to talk about estate planning with their children because of the inherently private nature of those decisions, not to mention that it is a reminder of their own mortality. However, having a discussion of one’s estate plan can significantly lessen the possibility of a family conflict later on. One, it will be less of a surprise for their heirs, and two, your clients will have an opportunity to explain their decisions. If siblings know ahead of time what they can expect to be getting, and what roles they will play in the administration of their parent’s estate, petty squabbles and probate feuds can be avoided. If clients are too uncomfortable having this conversation, then you could recommend that they record a video of themselves explaining their estate plan to their beneficiaries. Not only can this deter family members from contesting a will, but should they try to, it would provide strong evidence against undue influence and other reasons for contestation.

2. Transfer on death strategies

Some clients may be tempted to simply gift their assets away when they are living to avoid probate at their death. This method is incredibly risky, as the client can lose access and control over the asset while they are still living (i.e. a house or bank account).To retain access and control over an asset, you might advise your client to use a “transfer upon death” strategy, such as a beneficiary deed for real property, transfer or pay on death designation for bank accounts,  and a beneficiary designation for retirement accounts and life insurance policies.

3. Create a gifting trust

Compared to a will trusts, including gifting trusts, are much more difficult to contest. In addition to avoiding the possibility of probate at the grantor’s death, a gifting trust is an excellent vehicle for transferring family wealth. At the grantor’s death, family fighting can be avoided with the creation of a single dynasty trust for descendants or division of remaining trust property into equal shares for descendants. Indeed, a gifting trust is an excellent way for a grantor to be intentional in transferring wealth to future generations.

Since trusts can be time-consuming documents to create, an attorney would greatly benefit from using legal drafting software, such as Wealth Docx®. Download our Gift Trust sample and see how Wealth Docx’s crummy withdrawal rights can be easily included to take advantage of the annual gift tax exclusion and avoid gift tax on trust transfers.

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