At Davidson Law Group, we strongly believe that having your assets in a trust is the best possible way to keep your loved ones from having to deal with the Probate Court.  A trust allows you to create a plan for your wealth and assets and keeps it all out of the public eye.  A trust is the most effective way to communicate to your loved ones exactly how you want your estate to be distributed without any interference from the government.  A trust is most certainly a good idea if you own property in multiple states, if you are concerned about becoming incapacitated, or if you are afraid that family members will disagree about your wishes after you pass.  However, if you simply want to protect your loved ones, choose your beneficiaries, and control the distribution of your assets, a trust is right for you.  During your free consultation, we can help you determine which type of trust is fitting for you unique situation and dive into more detail on the amazing benefits of a trust as an alternative to Probate.

The proceeds of life insurance, IRAs, and other retirement accounts give you the ability to determine beneficiaries while you are still alive, and then distribute these assets to your beneficiaries outside of Probate when you pass.  If avoiding Probate is your only goal, then this is a good option, but it must be said that this option alone does not provide the protection and control that a trust can offer.

An Enhanced Life Estate Deed or Lady Bird Deed is a legal mechanism that allows you to transfer real estate to beneficiaries outside of Probate without losing control over the property during your lifetime.  Basically, you are giving beneficiaries remainder interest in a piece of property while retaining a life estate while you are living.  A life estate means that you can occupy, use, sell, or mortgage the property, and you can change beneficiaries at any time.  Under a Lady Bird Deed, the property is protected from creditors of the beneficiaries during the owner’s lifetime, and the transfer does have gift tax consequences or affect the look-back period for Medicaid qualification.  Another major benefit of a Lady Bird Deed is that the beneficiaries would receive the property with a stepped-up basis, meaning that if a beneficiary attempted to sell the house, the cost basis would be based on the date of death value and could save significantly on capital gains taxes.  A Lady Bird Deed is a great tool because it allows property to be transferred outside of Probate with some creditor, Medicaid, and tax protection; Lady Bird Deeds can also be used in conjunction with trusts for maximum protection and convenience.

You can add loved ones as “Joint Tenants with Rights of Survivorship” to your assets so that those assets can pass to the loved ones outside of Probate, but this is more complicated than just having a Joint Account with someone.  An attorney at Davidson Law Group can make sure that you file the correct paperwork to properly make a loved a Joint Tenant with Rights of Survivorship.  However, even if you have properly created a Joint Tenancy, there are still some dangers to this strategy in that it does not give the creditor protection of the trust.  In fact, the person you add as a Joint Tenant can make you susceptible to their own creditors while you are still alive.  Even though this strategy does have pitfalls and does not hold the same creditor protection as a trust, it is still a good option if your only goal is to avoid Probate.

The Transfer on Death Deed works very similarly to the Transfer on Death Account in that it allows you to designate a primary and contingent beneficiary to receive your real property outside of Probate after you pass away.  There are very specific elements that are required by law for a Transfer on Death Deed to be effective, so it is very important that you meet with an attorney before attempting to file a Transfer on Death Deed.  Also, much like the Transfer on Death Accounts, the deeds do not offer the creditor protection and control over assets that a trust provides.

Even if all of a person’s assets were in a trust before they passed away, there are still many legal procedures that should be handled prior to the distribution of assets.  By consulting with an estate planning attorney from Davidson Law Group, you can have rest assured that everything is being handled correctly.  Failing to have a proper trust administration could result in added tax consequences, improper transfer of assets, legal liability for the trustee, and other issues that could have easily been avoided by talking to an attorney about trust administration.