Inheritance Protection Strategies
December 31st, 2009 Filed under: ab trust,Executor Fees,sample wills,Trusts attorney — Estate Planning Author
For most people receiving inheritance is a mixed blessing. Heirs receive property or cash from a loved one who has died. During the grieving process, family members aren’t thinking about how much money or property they will inherit.
Inheritance assets are usually gifted through the decedent’s last will and testament. If decedents do not establish a trust their assets must undergo the probate process. Probate is handled differently in each state, but the process typically extends for several months.
Probate is necessary to validate decedent’s wills, locate missing heirs, pay outstanding financial obligations, and distribute remaining inheritance money and property to named beneficiaries. If no Will exists, a probate judge appoints an estate administrator to settle the estate. Inheritance property is then distributed according to probate laws of the state where the decedent resided.
It is not uncommon for heirs’ inheritance to be depleted during the probate process. Estate settlement costs, attorney fees, and outstanding debts must be paid before distribution can occur. The longer probate drags on, the higher potential for beneficiaries to lose most of their inheritance.
It is estimated less than 20-percent of heirs receive their intended inheritance gifts. Three options are available to protect assets and ensure heirs receive all of the property and money intended for them.
The first option involves giving away money and valuable assets prior to death. It is not uncommon for people to "gift" cash, financial assets, real estate and personal belongings to their loved ones while they are still alive.
The Internal Revenue Service permits gifts up to $12,000 per person or $20,000 per married couple per year, without being subjected to inheritance tax. Not only does gifting ensure beneficiaries receive the property, it reduces taxation and keeps assets out of probate.
The second option involves creating a trust. Many types of trusts exist, so it is best to consult with an estate planning service or probate lawyer. Inheritance property placed inside a trust is no longer considered part of the estate and exempt from probate.
Individuals who establish a trust must also execute a last will and testament. Trusts are managed by a Trustee, who is designated within the Will. Estate administrators in charge of trusts have fewer duties than those who administer probated estates because most of the tasks have been addressed through the trust.
The third option involves assigning ‘payable on death’ or ‘transfer on death’ beneficiaries. Payable on death can be used for checking and savings accounts, while transfer on death is used for individual retirement accounts, financial portfolios, and life insurance proceeds.
It is quite simple to assign beneficiaries to financial accounts and usually takes less than 15 minutes to complete necessary forms. Account holders can establish as many beneficiaries as they desire along with the percentage of funds they are to receive.
For example, an individual has a checking and savings account and wants the funds to be distributed equally amongst his four adult children. He would fill out a payable on death form at the bank and list the names, addresses and social security number of each recipient.
Beneficiaries cannot access funds until death occurs. They would then present their identification and a copy of the death certificate to claim their inheritance. Most states require estate administrators to submit forms to the county tax assessor’s office to verify the decedent does not owe outstanding taxes. This form must be stamped before financial institutions can release funds to beneficiaries.
Estate planning is the only way to protect inheritance assets. Most probate lawyers and estate planners provide complimentary consultations to help individuals determine which protection strategies are best suited for them.
Simon Volkov is a private investor who specializes in probate affairs. Simon has published hundreds of articles regarding estate planning, inheritance, and probate to help people develop strategies to protect assets. Simon offers cash for inheritance advances to heirs entitled to assets held in probate. He also buys probate real estate in southern California, Washington, Nevada and Arizona. Learn more about available programs at http://www.SimonVolkov.com.
