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The meaning of probate is often misunderstood. Probate simply means a judge determines that your Will is valid and authorizes the person you have named in your Will to begin settling your estate. In Indiana, probate estates can be settled without going to court and without court supervision. This means that in most cases there may not be a need to avoid probate at all. It is also a common misconception that more tax will be due if probate is necessary. There are no additional taxes due when probate is involved. In fact, the vast majority of heirs in Indiana do not pay any tax upon receiving an inheritance, regardless of how assets are transferred upon death.
Some people choose to establish revocable trusts to avoid probate. Trusts are advisable in some instances, such as when there is out of state property or when privacy is a concern. However, a simple Will is usually more costeffective and is much easier for clients to maintain. Many times, a person who establishes a trust does not get assets properly retitled to the trust. Upon death, this person’s heirs now have a trust to settle, and they must go through probate to transfer assets that were not in the trust, making for extra, unnecessary work. Many believe or are told that having a trust protects assets if someone needs nursing home care. A revocable trust set up to avoid probate does not protect assets from the costs of long-term care.
Aside from trusts, some people will name beneficiaries or joint owners on accounts to avoid probate. While this can be a useful tool in some estate plans, be careful with this approach. Accounts that transfer directly to a beneficiary are no longer available to your personal representative to pay your funeral bill, medical expenses, real estate expenses and income tax. Naming direct beneficiaries who are minors or who are disabled can create more problems for those beneficiaries than solutions. In many estate plans, a combination of a Will and beneficiary designations on certain accounts and
investments works well, but this should be discussed with an estate planning attorney. Each client’s circumstances are unique and estate planning is not “one size fits all”. Contact the attorneys at Voelz, Reed, & Mount, LLC to discuss which estate plan is right for you.