How To Prevent Your Family's Assets From Being Frozen in Probate
Probate is a long process that publicly sorts through your family’s assets. On average, probate can take anywhere from nine months to two years. During the first period of probate proceedings, your family’s assets will be frozen. This means that none of these assets can be withdrawn, transferred, or sold. If your family requires money to cover living costs, they will have to petition the court for a living allowance. That allowance can be denied by the court, leaving your family without access to your assets for a period of time after you die. If this scenario makes you feel uneasy, there are legal avenues available, but the solution requires action on your part.
What Is Probate?
Probate is the public court process that verifies people’s wills and distributes their assets. The proceedings become public record, which means the public will have access to information revealing how much money and property your family owned. The probate court’s first issue of business is verifying the accuracy of the will.
This may sound like a simple process, but during this time, state law requires that all assets under your name be completely frozen. If no one contests the will, the verification time may be short. However, if even one person contests the validity of your will, your case could be tied up in court for over two years with your assets completely frozen for the duration of this time. After validity is established, the estate, minus any debt, court costs, attorney’s fees, and taxes will be distributed according to your will. Probate may result in hardship if your spouse and young children are left to bear the process.
Avoiding Probate through Joint Ownership
Placing all accounts, including auto and property deeds, into both you and your spouse’s name may be one way to avoid frozen probate assets. When an account has two owners and one dies, the surviving spouse can maintain full ownership by showing a certificate of death and filing new deeds where appropriate. This process can protect your family from the probate court’s ability to control and freeze assets, but it is not a complete safety net. If both you and your spouse die at the same time, the estate will go through probate and all of its proceedings.
Establishing a Revocable Living Trust to Avoid Probate
A revocable living trust is a legally established way to remove your property from your possession without removing your rights to control the property while you are able to do so. A revocable trust is established through paperwork, similar to a will. The difference is that all assets, that means money, property, stocks, bonds and automobiles, are removed from you and your spouse’s accounts and placed into a trust account.
In this case, any named trustees are still responsible for controlling the trust assets, so you and your spouse become the named trustees on the trust account. You still have the same control and fill out the same taxes each year. The difference is that the property is no longer in your immediate possession, so there is nothing for the probate court to freeze and verify. The process avoids any asset freezes or contests.
How Can I Protect My Family?
Estate planning is a complex area of the law, and trust documents require specific wording. If you are ready to discuss the best option for your family, set up an appointment with an estate planning attorney.