A popular misconception is that if you have a Will your estate will avoid probate. Not true! If your estate exceeds $100,000, probate of a will is necessary.
How do you avoid probate? Simply stated, you can avoid probate if you do not have any assets in your name at the time of death. This can be accomplished in several ways.
Joint ownership or tenancy by the entirety is frequently used between a husband and wife. If one of the spouses dies, the surviving spouse owns the property without the need of probate. Problems arise however, if both spouses die in a common accident or when the surviving spouse passes away.
The most secure way to avoid probate is with a Living Trust. In a Living Trust you are the trustee and beneficiary so no annual expenses are incurred (as would be the case in a Trust at a bank or trust company). The Living Trust Agreement makes provisions for how the assets in the trust are to be distributed after the death of the spouses. The trust agreement then acts like a will. With larger estates, Living Trusts may provide significant tax savings. The current Federal estate tax exemption is $12,000,000 and the Illinois inheritance tax exemption is $4,000,000.
Cost of a Living Trust is dependent on what needs to be done. Generally a simple Living Trust currently costs $1,200.00 to $1,500.00. While this may seem like a lot of money, the average probate proceeding costs between $3,000.00 to $5,000.00 and takes 8 to 10 months to complete. Keep in mind that a proper Estate Plan can shelter up to double the amount of the exemption.
If you need further information regarding Wills & Estate Planning please contact us.