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Managing assets in estate planning

Certified financial plannerFebruary 17, 2013 

Neil Brown

When you die with a will, your estate goes through a process that manages, settles and distributes your property according to its terms. This process is governed by state law and is called probate. Probate proceedings fall under the jurisdiction of the probate court in the state in which lived at the time of your death. If you own property located in another state, you may be required to initiate ancillary probate proceedings in that state as well.

Items that are subject to probate generally consist of any property that you own individually at the time of your death and that pass to your beneficiaries according to the terms of your will. Property that passes outside of your will does not have to go through probate.

If an estate goes through probate, the probate court supervises its administration. Depending on where your estate is probated and its size, the process can take as little as three months or as long as two years or more. Probate costs usually include court costs, publication costs for legal notices, attorney’s and accountant fees, executor’s fees, bond premiums and appraisal fees.

While there are advantages to probate, it can be a lengthy and costly process. As such, it may be advisable to take advantage of various estate planning techniques that can reduce or eliminate your probate estate:

•  Payable-on-death bank and investment accounts offer one of the easiest ways to avoid probate. All you need to do is fill out a simple form, provided by the institution, naming the person you want to inherit the money in the account at your death. As long as you are alive, the person you named to inherit the money has no rights to it. You can spend the money, name a different beneficiary or close the account.

At your death, the beneficiary shows proof of the death and of his or her identity and collects whatever funds are in the account. The probate court is never involved.

If you and your spouse have a joint account, when the first spouse dies, the funds in the account will become the property of the survivor, without probate. If you add a payable-on-death designation, it will take effect only when the second spouse dies.

•  For retirement accounts and life insurance, the forms you fill out will ask you to name a beneficiary for the account. After your death, whatever funds are left in the account will not have to go through probate unless you named the estate as the beneficiary. Instead, the beneficiary you named can claim the money directly from the account custodian.

•  Joint ownership provides an easy way to avoid probate when the first owner dies.

However, this must be closely examined with other estate planning needs because joint ownership can wreak havoc on complicated trust planning.

•  Funded living trusts also allow people to avoid the probate process. However, if you have a trust and your assets are not titled to such, they will still go through probate at your death to reach the trust. After your death, the trustee can easily and quickly transfer the trust property to beneficiaries without probate. You specify in the trust document, which is similar to a will, who you want to inherit the property.

Planning for probate avoidance should be high on your list and should be discussed with your estate attorney, certified financial planner and CPA.

Neil A. Brown is a CPA and CFP with Burkett Financial Services in West Columbia. Reach him at or (803) 200-2272.

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