The “10 Most Gruesome Estate Planning Mistakes” series. Mistake #1: Dying Intestate

To die intestate means that you died without a valid Will.

If you die without a Will or some other form of estate planning, the state in which you reside and the IRS will simply make one for you. Of course, they have no interest in avoiding or reducing estate taxes, minimizing estate administration costs or protecting your family and legacy. The distribution of your assets will just be turned over to the Probate Court to be distributed in accordance to the government’s rule book.

There are Four Ways to Pass Property at Your Death

  1. Joint Property: is a type of ownership of property or asset in which you and another co-owner have a right of survivorship, meaning that when you die, your interest in the property will pass to the surviving owner or owners by operation of law, avoiding probate. Examples of joint property ownership are joint bank accounts and jointly owned real estate.
  1. Beneficiary Designation: you name a person designated as the recipient of funds or other property under the terms of a contract. For example, you have an IRA, 401k, or a Life Insurance Policy. By contract, the beneficiary you designate will receive your funds at your death, thereby avoiding probate.
  1. Trust: if you put your property into a trust, and the trust is drafted and funded properly (funded means that all of your assets that you want to pass are titled in the trust), your property will pass to your beneficiaries at your death according to the terms of the trust, avoiding probate.
  1. Probate Court: if you have assets titled in your name at your death and you have not provided a mechanism to pass the assets to your beneficiaries (i.e. the above three ways to pass property at your death), the only mechanism left to pass your assets is the Probate Court.

What is Probate?

Probate refers to the method by which your estate is administered and processed through the legal system after you die. The probate process essentially transfers your estate in a certain manner (for example, your debts and taxes paid before your beneficiaries receive their inheritance). Think of the probate process as the “script” that guides the transfer of your estate according to the rulebook of the state you live in.

The probate process is needlessly time consuming, frustrating and expensive. It is also open to the public, meaning creditors, predators or anyone else will have complete access to all information about your estate. For the vast majority of people, the benefits of a Will or other estate planning tools far outweigh any initial costs.

Get Educated

To learn more, join us for one of our FREE LifeCare Planning Workshops. Our estate planning experts will have upcoming workshops in Ann Arbor, Bloomfield Hills, Brighton, Dearborn, Lansing, Livonia, Novi, and Trenton. We promise that time will fly, you’ll learn a lot, and have a little bit of fun. To sign up for a LifeCare Planning Workshop click here.

The post The “10 Most Gruesome Estate Planning Mistakes” series. Mistake #1: Dying Intestate appeared first on Michigan Estate Planning.

Tagged with: , , , , , ,