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Jensen: 3 tools to help protect assets, avoid probate


People work long and hard to build wealth that they want to enjoy during their lifetime — and pass on to their loved ones when they die.

But in hopes of protecting assets and maximizing the transfer of wealth to their heirs, some individuals overlook several tools that can simplify their estate planning and ensure private family matters remain private and outside the purview of public probate proceedings.

After all, nobody wants the government to interfere with their personal business in life. So, why would anyone want to let the government interfere with their business at death?

Here are three estate planning tools that can help people protect their assets and avoid the probate process.

Revocable trust

Also known as living trusts, revocable trusts are fiduciary arrangements under which individuals place their assets and outline how those assets should be handled before and after their death.

The primary benefit of revocable trusts is to avoid probate upon death. With a trust, people’s personal details and assets remain private rather than being revealed in a public probate proceeding.

They also can mitigate familial drama by explicitly outlining how assets are to be distributed upon death, including making sure there are necessary funds available for expenses such as funeral costs or paying taxes.

Beneficiary deed

For people looking to leave their homes to loved ones without probate entering the picture, the simplest solution is a beneficiary deed.

Unlike other types of deeds or title changes, a beneficiary deed executes a transfer of property upon the homeowner’s death.

This not only helps avoid probate headaches, but also limits potential ownership hassles and tax implications that result from simply adding a loved one as a co-owner of the home.

For example, adding an heir without a beneficiary deed immediately gives that individual partial ownership of the property. This means the primary homeowner must obtain their heir’s permission to do anything with the property, such as selling or refinancing on a mortgage.

Secondly, adding a loved one as partial owner of the home is considered a gift under tax rules and applies against a person’s annual $15,000 gift-giving tax exemption.

Payable on death

The potential risks of adding a child or other potential beneficiary as a co-owner on bank and financial accounts are legion.

As an account co-owner, there’s nothing preventing an heir from draining the funds or using money for their own purposes. Plus, were they to be party to a lawsuit or other legal action, those assets would be at risk.

To avoid these risks but still ensure a seamless transfer of account ownership upon passing, individuals should establish a payable-on-death beneficiary.

Like a beneficiary deed for real property, a POD designation ensures the primary account holder retains full ownership and access to their accounts and money during their lifetime, while establishing a specific beneficiary to receive those funds upon death.

POD designations also keep the funds of those designated accounts out of the probate process.

Estate planning attorney can identify blind spots

Regardless of how complex or simple a person’s estate planning needs are, there’s always room to seek legal advice and identify any blind spots.

A highly experienced estate planning attorney can assess a person’s situation and provide advice and direction to help them reach their goals.

Editor’s note: Mesa resident Scott Jensen is a partner with Guidant Law. His extensive understanding of the intricacies of estate planning, probate and trust administration enables him to devise creative estate solutions and strategies tailored to client’s needs and goals. More at guidant.law.

opinion, letters