Probate can seem like a dreaded process for a beneficiary or estate executor. Chances are, you will want to make sure assets are secured for beneficiaries. Probate can be stressful because many worry that assets will be overtaxed or debts will be so large that there is nothing left when it’s time to finally disperse assets. When a loved one takes the time to carefully plan their estate with an attorney, they can ensure that assets are secured for beneficiaries and are provided to them in a timely manner. Perhaps one thing that many worry about is how an award from a personal injury settlement will pass through probate, if at all.
The Purpose of Probate
Probate allows for an executor to legally and officially transfer assets to beneficiaries. Probate also ensures that the process occurs in a legitimate manner by having the court system validate the will of the deceased and confirm the executor of the estate. In the absence of a will, a probate just may appoint an estate executor to distribute assets to beneficiaries. In some situations, they may even make decisions regarding the process. Probate involves the following key elements:
- Validating the will
- Identifying the estate executor
- Giving notice to family and debt collectors who may have a claim
- Paying off all debts carried by the decedent and completing their income taxes
- Distributing assets to beneficiaries
One of the biggest questions executors and beneficiaries often have are the details surrounding which assets must pass through probate and which are exempt. Assets that are required to pass through probate include:
- Anything that was solely owned by the person who passed away
Assets that may be able to avoid the probate process include:
- 401K and other retirement accounts (as long as there was a named beneficiary)
- Jointly Owned Property
- Payable on Death Accounts (POD) such as a bank account
- Transfer on Death (TOD) assets such as boats or cars
An attorney may take on the helpful role of looking at the will and assets of the estate and determining which assets may be protected from probate. It’s always a good idea to participate in estate planning early on to ensure that you and your attorney are able to make plans around assets and how they may be disbursed in a way that allows for you to avoid probate.
Personal Injury Settlements
By accounting for a personal injury award during the estate planning process can not only help to ensure that there is a clear plan in place; but also to mitigate the taxes you may be required to pay. Ensuring that there is an estate plan in place for a personal injury settlement is key when distributing assets. Amongst grief, the last thing anyone wants to manage is contentious relationships and squabbling over a loved one’s assets. How you invested or used your settlement award will play a significant role in whether you must endure the probate process. If your settlement was in an account that was payable on death (POD) or an investment account that was transferable on death (TOD), the award may not have to go through probate.
Ensuring that assets are secured and accounted for during the probate process and beyond will be essential for beneficiaries. Although the death of a loved one can be an incredibly sad time for family and friends, it can also be stressful, especially if complications arise during the probate process. An estate planning lawyer Abingdon, VA trusts can be helpful in securing assets, protecting some from probate and helping an estate executor to manage the probate process.
Thank you to our friends and contributors at The Law Offices of Mark T. Hurt for their knowledge about probate and estate planning.