Introduction
Do you know what happens to a decedents assets upon his or her death? Who does his or her property go to? What happens if he or she has no will? Who determines to whom the decedent’s assets are distributed? These are questions faced by many families’ and individuals’ across the country. So, then, what are the short answers to these questions? Relatively speaking, there really are no “short” answers to these questions. However, there are existing rules and regulations included in the Internal Revenue Code and other statutory authority which guide taxpayers as to property distributions, wealth transfers, etc. upon the death of an individual. In the discussion that follows, we will review the topic of probate, regarding its purpose …show more content…
Before getting into the “how” to avoid probate discussion, let’s first consider some of the reasons as to why one might wish not to have their property transferred through the courts. Although there are certainly advantages of probate, unfavorable consequences do exist. According to Camden and Farley, the major drawbacks and concerns of the probate process include “the cost, complexity, and time taken to administer the probate process” (Camden, Farley, 2007 pp. 2), not to mention the lack of privacy in administering the probate estate through the courts. Not surprisingly, one of the main concerns of probate administration is the cost associated with the entire process. It should be noted, probate costs can and do vary widely, depending on certain contingencies, and should be considered on a case by case basis. Some of the factors affecting the cost and time—which, in effect, are positively correlated— to administer a probate estate include how large and complex the decedents estate is, how many heirs’ of the decedent exist and whether or not the will is contested. More specifically, some of the standard administration costs include court filing fees, personal representative fees, posting of bonds, attorney and accountant fees, property transfer and appraisal fees and fees associated with other general filings (Free Advice, 2014). That said, probate …show more content…
The living trust provides superior flexibility as to how ones assets are handled, not only at death, but in the case of illness or incapacitation. Some of the options available to the settlor of a trust include the manner in which his or her corpus will be managed or is administered, and when and to whom the assets are distributed. These assets in trust can be managed in conceivably any way the trustor so wishes and is arguably one of the greatest benefits of utilizing the trust, in addition of course to avoiding probate, among other advantages, such as more privacy, greater creditor protection, potentially greater tax advantages, etc. Some of the drawbacks of the trust approach, however, include the time and planning associated with establishing and managing the trust, the required funding and hassle associated with the transferring of ones assets to the trust, as well as creating the potential for unforeseen or unintended tax or legal outcomes associated with complex trust and estate planning. Not to mention, many planners and tax professionals argue that, in many cases, the majority of tax payers need not utilize the trust approach as most estates usually either bear no tax burden and the majority of them being so relatively small
Do you know what happens to a decedents assets upon his or her death? Who does his or her property go to? What happens if he or she has no will? Who determines to whom the decedent’s assets are distributed? These are questions faced by many families’ and individuals’ across the country. So, then, what are the short answers to these questions? Relatively speaking, there really are no “short” answers to these questions. However, there are existing rules and regulations included in the Internal Revenue Code and other statutory authority which guide taxpayers as to property distributions, wealth transfers, etc. upon the death of an individual. In the discussion that follows, we will review the topic of probate, regarding its purpose …show more content…
Before getting into the “how” to avoid probate discussion, let’s first consider some of the reasons as to why one might wish not to have their property transferred through the courts. Although there are certainly advantages of probate, unfavorable consequences do exist. According to Camden and Farley, the major drawbacks and concerns of the probate process include “the cost, complexity, and time taken to administer the probate process” (Camden, Farley, 2007 pp. 2), not to mention the lack of privacy in administering the probate estate through the courts. Not surprisingly, one of the main concerns of probate administration is the cost associated with the entire process. It should be noted, probate costs can and do vary widely, depending on certain contingencies, and should be considered on a case by case basis. Some of the factors affecting the cost and time—which, in effect, are positively correlated— to administer a probate estate include how large and complex the decedents estate is, how many heirs’ of the decedent exist and whether or not the will is contested. More specifically, some of the standard administration costs include court filing fees, personal representative fees, posting of bonds, attorney and accountant fees, property transfer and appraisal fees and fees associated with other general filings (Free Advice, 2014). That said, probate …show more content…
The living trust provides superior flexibility as to how ones assets are handled, not only at death, but in the case of illness or incapacitation. Some of the options available to the settlor of a trust include the manner in which his or her corpus will be managed or is administered, and when and to whom the assets are distributed. These assets in trust can be managed in conceivably any way the trustor so wishes and is arguably one of the greatest benefits of utilizing the trust, in addition of course to avoiding probate, among other advantages, such as more privacy, greater creditor protection, potentially greater tax advantages, etc. Some of the drawbacks of the trust approach, however, include the time and planning associated with establishing and managing the trust, the required funding and hassle associated with the transferring of ones assets to the trust, as well as creating the potential for unforeseen or unintended tax or legal outcomes associated with complex trust and estate planning. Not to mention, many planners and tax professionals argue that, in many cases, the majority of tax payers need not utilize the trust approach as most estates usually either bear no tax burden and the majority of them being so relatively small