Most people know that they want to avoid probate in Michigan, the question we get as Oakland County Probate Lawyers is "How to avoid probate?"
Probate is easily avoidable when you understand how estate administration works, which is the process of getting assets out of your name when you pass away.
If you set things up correctly, probate in Michigan is easy to avoid. Don't send your loved ones to court if they don't need to go. Learn the ways assets can get out of your name, without forcing your loved ones to probate court.
There are four ways assets get out of your name when your pass away.
One way to avoid probate is through joint ownership. For example, a husband and wife, joint on a checking account, if one of them passes away it goes to the survivor. Very straight forward. However, joint ownership should only be used for a married couple, adding anyone else jointly to an account is probably a bad idea for a variety of reasons including, liability issues, tax issues and control issues.
If you pass away with Life Insurance or a retirement account, like a 401k or IRA, chances are you named a beneficiary to the account. What that means is that when you pass away, the account or insurance policy goes to the person that you named.
One of the problems with beneficiary designations to avoid probate is that it is relying on the pillow case of money approach. Basically, you're just giving a pillow case of money to your loved one. For example, let's say you named your daughter as a beneficiary, you pass away, it goes outright to your daughter. Then she gets divorced...well, half that money may be going to your daughter's ex-spouse.
The third way that assets may transfer from a deceased is through trusts. There are many types of trusts, including revocable living trusts and asset protection trusts, like Castle Trusts.
Think of a trust like a suitcase, you put assets into the suitcase, then when you pass away, you pass that suitcase to your successor trustee to then administer per the terms of the trust
If an asset does not pass through joint ownership, beneficiary designation or trust, then it ends up in Michigan probate, which is what most people want to avoid. Why avoid probate? Probate is time consuming, costly and public.
Michigan Probate is Time Consuming
Probate in Michigan, by statute, takes at least five months and can take a over a year, especially if there is any real estate involved.
Michigan Probate is Costly
There are a variety of fees associated with probate. For example, there are filing fees, inventory fees, publication fees, and sometimes attorney fees. It's not unusual for 3-5% of all the assets that go through probate get eaten up costs. It is especially unfortunate, because probate can easily be avoided.
Michigan Probate is Public
Most people want to keep their affairs private. Probate in Michigan, whether it's Oakland County Probate, Wayne County Probate or Livingston County Probate is a public affair. This means anyone can see what is happening in probate and who is inheriting what. Therefore, if you want to keep your matters private, stay out of probate.
Learn the Best Probate Avoidance Strategies in Michigan
If you are looking at avoiding probate, then you should attend one of our upcoming, free, legal workshops on estate planning, entitled Planning for the Second Half of Life, Protect Yourself in 3 Easy Steps.