A Living Trust Will Help You to Avoid Probate : Join tenancy and other arrangements ensure your assets won’t go to lawyers.

Now is the time to plan ahead if you want to maximize the estate you leave to your loved ones.

When you die, most of your assets will become subject to probate. That means an attorney is usually required. In most states, attorneys can charge statutory fees of 6% to 22% of the estate. Additional court and transfer fees also apply. If you are interested in avoiding these costs, plus increasing control over your estate, read on.

Why avoid probate? When a person dies, their assets must be distributed in probate either according to their will or by the state law of intestate succession if they died without a will.

The probate steps are:

1. The attorney for the deceased’s estate files a court petition for probate.

2. The attorney becomes entitled to statutory fees unless the attorney agrees to a lower fee.

3. The court appoints an executor or administrator, also entitled to statutory fees.

4. A monetary bond must be posted by the executor or administrator unless waived in the will or by the will’s beneficiaries.

5. Notice is given to creditors by publishing a legal notice in a local newspaper.

6. A widow’s family allowance can be given.

7. All assets of the deceased must be inventoried.

8. Creditor’s claims of the deceased are paid.

9. Assets may have to be sold to pay the deceased’s debts, plus any federal and state death taxes, as well as the statutory fees of the attorney and estate executor or administrator.

10. Any assets left are distributed to the heirs.

11. Final federal and state tax returns, plus estate and inheritance returns, are filed.

How can you avoid most of the probate hassle? If you or a loved one is interested in avoiding probate and saving most of these costs, here are some suggestions to consider:

1. Hold title in joint tenancy with right of survivorship. Most married couples own their homes and other real estate in joint tenancy with right of survivorship. When one joint tenant dies, the surviving joint tenant automatically receives the title, usually by recording the death certificate and an affidavit of survivorship.

However, in most states: joint tenancy assets are subject to claims of the deceased joint tenant’s creditors, a joint tenant can break up a joint tenancy by a partition lawsuit, a conservator or guardian can be appointed for a joint tenant, if all joint tenants die at the same time their assets become subject to probate. Joint tenants have no control over who receives their property because joint tenancy real estate is not subject to a deceased joint tenant’s will.

2. Make life insurance policies payable to the beneficiary. This avoids payment delays if the policy is payable to the deceased’s estate.

3. Hold title in a living (inter vivos) trust. Many lawyers hate living trusts because then the attorney can’t collect probate fees. A living trust is a legal entity that avoids probate by holding title to the owner’s home, car, bank accounts, investment real estate, stocks, bonds and other major assets.

Most people are not familiar with the advantages of a living trust.

Probably the most famous user of a living trust was the late Bing Crosby, who held virtually all his assets in a living trust. Until he died, Crosby completely controlled his property. But when he died, the living trust provisions took over to save probate costs and make certain the assets were distributed as he wished. The advantages include:

1. Privacy. The contents of a living trust are not recorded, so the public cannot learn who is the successor beneficiary after the trust creator (trustor) dies, or what assets are included.

2. Avoid possible conservatorship. Living trust assets are not subject to conservatorship if you become unable to care for yourself. Should you be incapable of managing your living trust, your named alternate trustee takes over with no need for court action.

3. Change or revoke any time. Until the trust creator dies, a living trust can be amended or revoked. But upon death, it becomes irrevocable and the trustor’s wishes expressed in the trust must be carried out.

4. No effect on real estate taxes. Placing your real estate and other major assets into a living trust has no effect on your property tax or income tax situation. A separate tax return for the living trust is not required.

5. You retain complete control until you die. While you are alive and managing your living trust, you handle your assets the same as before. But when you die, a disinherited relative, creditors and others cannot acquire assets in the living trust. Your will applies only to property not included in the living trust, such as cash in your wallet.

6. The costs of probate are avoided. By saving probate costs, more of your assets can be passed on to the people you want to receive your assets.