Taking a few steps now can mean saving valuable time and expense for your property – and loved ones – later on.
Michelle Kaminsky, Esq.
updated May 19, 2021 3 min read
Without proper estate planning, it can prove to be a lengthy and costly stress for your heirs. So, when preparing end-of-life documents such as wills, previous orders, and living wills, be sure to do everything in your power to avoid inheritance.
Before we get into how to avoid an inheritance, let’s talk about what an inheritance is and why you want to circumvent the inheritance law.
What does the proof mean?
Succession is a court-controlled process of satisfying the deceased’s estate and ceding his estate to his heirs.
Just having a last will does not prevent inheritance; in fact, a will must pass through a will. To succession a will, the document is filed with the court, and a personal representative is appointed to gather the decedent’s assets and take care of any outstanding debts or taxes. The personal representative can then distribute the decedent’s assets to the heirs.
Why should you avoid relegations?
Since collecting assets and paying off debts can be time-consuming and expensive, it can delay distributing your property to loved ones. At worst, a lengthy inheritance process can take several months or even years to sink into the assets held by the heirs.
Plus, if you need to involve a probate attorney, you’re looking at even more fees and delays.
Consequently, if you can avoid inheritance and transfer your property directly to your heirs without the involvement of the probate court, you want to do so.
Now that you know what an heir is and why you probably want to avoid it, let’s move on to the most common ways to avoid an heir.
1. Co-ownership of the property
The co-ownership with right to subsistence passes directly to the co-owner who still lives. There are basically three main ways to share property with another person:
- Joint rental with the right to life imprisonment.I proprietari sono i "condomini" delle proprietà e il sopravvissuto assume la piena proprietà quando l’altro proprietario muore.
- Full lease.As with joint rentals, only this type of property is only available to married couples (including same-sex couples in some jurisdictions).
- Community property.In states with community property rights, spouses own assets, including the right to salvation.
2. Designations of the Beneficiaries
Life insurance and retirement accounts, including 401 (k), annuity and IRA accounts, have designated beneficiaries on the books; these funds go directly to the beneficiaries without going through a will.
3. Conti del tipo "pagamento dopo la morte" e "trasferimento dopo la morte"
Some states allow you to designate a recipient for a bank account, pay-to-death account, or POD account. You can also designate a beneficiary for your investment account via a death account transfer or TOD account.
4. Revocable Living Trust
One of the most common ways to avoid decline is to build trust. Through a living trust, the person creating the trust (the trustee) must “fund the trust” by placing the assets of her choice there.
The trustee retains control of the trust property until his death or incapacity.
At that point, the trust is turned over to the successor trustee, who had been chosen by the grantor and who will distribute trust property according to the grantor’s wishes. All of this takes place outside the scope of the succession process.
5. Return of Property
If you pass ownership of an asset to someone else within your lifetime, that property can’t and won’t be part of your estate when you die. Obviously, it wouldn’t be part of the succession process as your chosen heir would already have ownership of the asset.
However, depending on your situation, you may have to pay a donation tax, which can be expensive.
Sentences and deadlines included in the proceedings can have serious repercussions, perhaps even something you did not intend to do. To ensure that the property is safely handed over to the surviving spouse when one of the two named on the record dies, the language of the document should include some variations of “co-tenants with right to remain alive”.
This ruling is sufficient in most states to avoid going to the probate court to determine the title of the house when one of the co-owners dies. In some states, additional language has been included to ensure that both owners’ intentions are clear. For example, South Carolina uses the phrase “as a joint tenant with the right to survive, not a joint tenant”.
Tenants in joint and joint tenants
Joint tenants own half of the properties. Tenants may jointly own unequal stakes in the property. Multiple tenants can also be shared, while joint tenants are generally married couples.
After the death of one of the tenants, part of their property passes to the heir or heirs according to their will. The surviving owner or owners do not have automatic inheritance as is the case with joint tenants.
A joint lease is beneficial as it cannot be challenged by other relatives of the deceased. To acquire ownership of the property in most states, a survivor must present a death certificate to the office that manages property records in the county where the property is located. A survivor may also need to make an affidavit stating that they are a surviving co-tenant.
Entire lease vs. Joint tenants
In 24 states: Alaska, Arkansas, Delaware, Florida, Hawaii, Illinois, Indiana, Kentucky, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Jersey, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Vermont, Virginia, and Wyoming – Like the District of Columbia, another form of ownership is available to married couples: tenure. The property thus owned is considered to be wholly owned by both spouses and, as with a joint lease, the property passes promptly to the surviving husband or wife upon the death of the spouse.
Since both spouses are wholly co-owners of the property, creditors cannot attempt to seize it if they owe money only from one of the owners. However, if both owners owe the same money to the lender, the home is unsecured.
The “full” nature of this form of ownership also means that none of the owners can terminate the lease without the other owner’s legal consent. A joint tenancy can be legally terminated by one of the tenants without the consent of the other tenant.
Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin all have community property rights that recognize everything a couple purchases after marriage as equally owned by the spouses. Assets acquired before marriage or after separation are considered separate assets.
In some of these states, including California, property purchased by spouses is automatically transferred to the surviving spouse if the deed contains “bailout” or similar phrases. In other states, including Louisiana, survival is not a legal option. Full leasing is not permitted in any of the Commonwealth states either.
Seeking legal advice
You should consider consulting a real estate attorney if you are unsure which property structures are acceptable in your state or what type of property you should choose. In many cases, however, joint rent with the right to survive is the best option.
Avoiding relegation makes sense for most people
You’ve probably heard that a will is a long and expensive nightmare to be avoided at all costs, or perhaps you’ve heard that it’s not that bad. In fact, both scenarios may be correct. It often depends on how complex and extensive the property is.
Some properties are so small that they don’t even require a will. Others are quite large and require thoughtful and painstaking legal planning to avoid inheritance marriages. Either way, you may want to organize your assets to avoid inheritance for several common reasons, from a financial crisis for the heirs to a total lack of privacy in personal matters.
Your family may not have immediate access to cash
It can take weeks or even months to gain access to a deceased’s money. Your heirs can get stuck footing the bill for anything from funeral services to household utensils during this time if your possessions are to be tested. It is also likely that your family will not be able to access the cash in your bank accounts during this time.
They will have to maintain property insurance and pay taxes and possibly custody fees until the will is officially opened, which cannot be done without a court order. Your property and insurance policy must be kept until you take over the property.
If you have a spouse who is not working and does not have access to their own funds, they may have to pay even the most basic living expenses, such as shopping.
The probate judge could get in the way
Court approval is often required for any small step in the probate process, including the management or sale of the deceased’s business, the repair or sale of property, or the abandonment of worthless property such as a timeshare right with high annual maintenance costs.
There are a number of rules to follow, forms to submit, and ratings to submit. You can avoid all of this if your property passes the will. Your family will not have to deal with a hereditary judge who interferes in family financial matters.
Inheritance can cost you a lot of money
Courts across the country are prone to financial crises and often seek income when money is limited. One way to get funding is to increase court costs, including probate costs.
If your property requires the assistance of a lawyer, that person must also be paid. Many states make legal fees dependent on a percentage of wealth. Even a modest property consisting of a home, vehicle, and a few bank or investment accounts can incur legal fees of tens of thousands of dollars.
All of these fees are payable from your assets, sometimes from the sale of assets you intended to leave to your heirs. Probate can mean less money for them.
Land registers are public registers
Inheritance is a state judicial proceeding, so all information relating to the deceased’s inheritance, liabilities, beneficiaries and personal representatives is publicly available. Anyone can access the inheritance file and find out everything he wants to know. All he has to do is ask for the entire file and anyone in the office is unlikely to worry or ask why.
Worse still, some states have entire succession files available for viewing online. People don’t even have to go to court to ask for a file.
Avoidance of inheritance ensures the privacy of family business and financial information.
Useful information to guide you
Your probate process
“I want to avoid relegation to Illinois. What are my options?
Speaking in general,succession is the process through which a deceased person’s assets are distributed, as overseen by the court system. Probate is an important step in the estate administration process, and is designed to help ensure that the decedent’s debts are met and their assets disbursed fairly – not only in line with their wishes, but also in compliance with all state and local laws.
In practice, however, the succession process can be slow going and expensive. It’s often a complex and time-consuming effort for your loved ones, and it may expose sensitive or personal information about yourself or your possessions to the public record.
For these reasons and more, many people take steps to help as many of their assets as possible bypass the succession process entirely.
Do you evaluate your options? Here are a few steps that may help some of your assets avoid succession, helping expedite the process, preserve your privacy, and provide for your loved ones in a trying time:
1.) Establish co-ownership
Often, assets such as motor vehicles, real estate, or financial accounts that are owned jointly can bypass succession, provided that they are owned via “joint ownership with right of survivorship” (also referred to as “joint tenancy with right of survivorship”).
Assets owned in this manner almost always transfer ownership to the surviving party in the event of one co-owner’s death. This type of property is not to be confused with “shared tenancy”. With a tenancy in common arrangement, the deceased person’s share of an asset is distributed to their beneficiaries as directed by their will, meaning that the asset in question will probably not be able to avoid succession.
2.) Build trust
Trusts have long been known for their wealth planning benefits, which include:
- tax planning and preparation
- asset protection
- more privacy
Assets placed in a living trust, whether revocable or irrevocable, do not need to be successiond. Instead, upon the grantor’s death, the person named as the successor trustee receives control of the trust property, and is charged with collecting all trust assets and distributing them to the trust beneficiaries, in line with the grantor’s wishes.
With that said, if a will creates a trust, or stipulates that assets should be placed into to an already-existing trust (say, by means of a pour-over will), the will and the assets may still have to go through succession in some cases. For instance, pour-over wills, like other wills, do not avoid succession if they pass assets with an aggregate value exceeding $100,000, or if there is any real estate involved.
3.) Add the beneficiaries to their respective assets and accounts
Certain assets may avoid succession if you name a beneficiary for them prior to your death. In Illinois, death transfer and / or post-death payment recipients can be nominated for a variety of assets, including:
- Bank account
- Certificates of deposit
- Stocks, bonds, securities
When you create this markup (usually by means of fairly simple documentation), you retain sole control of the asset and can use it as you see fit. When you pass, your named beneficiary can claim the money or property directly, without having to go through succession.
With that being said, it’s important to recognize that there may still be circumstances in which assets with beneficiaries have to face succession. This is most often the case when the deceased identifies his estate as an heir or if the named beneficiary is already dead or has become incapacitated in some way.
Looking at the future
Ultimately, it’s important to remember that many of the specifics of the succession process for your estate will come down to your unique circumstances, including the size and complexity of your estate; the likelihood that family members will bring disagreement or disagreement; and the amount of attention you devote to the estate planning process at an early stage.
Working with a legal team experienced in all aspects of succession, estate planning, and estate administration may be one way to help chart the best course for you. Having a compassionate, objective expert on your side could set you up for greater peace of mind down the line – and help ensure that you’re able to provide for your family when they need it most.
Have any further questions about any topics pertaining to estate planning and succession in Illinois? Don’t hesitate to reach out to get the conversation started. We can assist with the basic steps of administering the succession estate, including matters of heirship, wills and trusts, independent or dependent administration, estate accounting, and distributions.
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Avoid falling without confidence in 4 simple steps:
How to avoid inheritance without trust
Avoiding succession without a trust is not always the best solution but it is possible. Most of my clients come to my office with the primary objective of avoiding succession. If your goal is to transfer your assets free of succession, a Living Trust may be a good solution for you. However, if you are attempting to avoid succession without a trust, this article will explain how. Before covering the how to, it’s important to briefly explain succession and why many want to avoid it.
What is an inheritance:
Inheritance is the process by which the state determines how the inheritance is liquidated. Depending on whether you have a will or not, they determine who will be your personal representative (executor) and who will inherit your assets. The State also supervises succession cases to ensure that outstanding creditors are paid.
Most individuals want to avoid succession for 3 reasons; costs, delays and privacy. Probate Court is not free, nor are the attorneys that your heirs will probably have to hire to help file the petitions and navigate the succession process. These costs have reduced the decline in heirs. No one wants to drag out this process, however, the quickest your heirs can get through succession is about 5-6 months, assuming everything is perfect and smooth. Let’s be honest, these things rarely are problem free, most succession cases take much longer, some take years.
These delays can be frustrating as they involve inheritance. Last is privacy, when it comes to succession, there really isn’t much privacy. Your succession case is public record, and in Arizona, anyone with an internet connection and curiosity can look up your case. Public records will allow them to see what assets you had at the time of your death and who your creditors were.
For many, a Revocable Living Trust is a great solution, but if you still want to avoid succession without a trust, here are the steps:
Beneficiary forms by nature not only avoid succession but hold up in court. The US Supreme Court has also ruled that other legal documents cannot alter what constitutes a beneficiary form. Therefore, it is very important to keep these documents up to date. Beneficiary forms are used for activities such as insurance: annuities, life insurance and other death indemnity policies. They can also be found on the Retirement Accounts: 401 (k) 403 (b) 457 Plan and SEP. As well as on all types of IRA’s: Traditional, Rollover, ROTH, Inherited, SEP, and SIMPLE.
Don’t forget to keep beneficiary forms updated, they will always be followed. Here is a typical scenario where you list your spouse as the beneficiary, then divorce, remarry. If you don’t update the beneficiary form, your former spouse will inherit the property at the time of your death. Even if your Last Will & Testament names your new spouse, if those forms still name your ex-spouse, that is who will inherit.
In Arizona, our Engines Division has provided us with a Title Transfer Beneficiary Form. These include vehicles, motorcycles, trailers, or any asset that would be titled through the MVD and avoid succession.
Payable After Death (POD)
POD is a specific account designation for bank accounts. The Paid On Death designation can be used for checks, savings, and certificates of deposit. If you are married, you can designate these accounts as linked to survival rights. Adding a POD (Payable on Death) designation will ensure the assets are available and avoid succession at the death of the survivor. Be careful not to title your adult children on bank accounts as this could be a taxable gift and would put that adult child’s credit account at risk.
Transfer after death (TOD)
The transfer on death is similar to the one paid on death, however TOD applies to investment accounts. Today, many people consider 401 (k), IRA, or other retirement accounts to be investment accounts, but they align with the beneficiary designation we talked about earlier. Investment accounts are called unskilled investment accounts or, in other words, non-retirement accounts. Death transfer allows the target person to inherit property in kind. In other words, if you owned 100 Disney shares worth $ 10,000, your TOD wouldn’t inherit $ 10,000, it now owns 100 Disney shares.
Deed of the beneficiary
L’atto di succession consentirà di trasferire la proprietà in caso di morte. It can be your home (primary residence), seasonal homes, rental homes, undeveloped plot of land, or indeed any property. Like the TOD designation, the designated beneficiary will be the owner of the property you left.
In closing, while it is possible to avoid succession without a trust, there are many more advantages to utilizing a Revocable Living Trust. Many times, these so-called do-it-yourself wealth planning techniques fail for a variety of reasons. This is important before seeing the real estate planner before doing anything. Although avoiding succession is important, there are many more important consideration when it comes to Estate Planning. If you choose to avoid succession without a trust, consider creating a Last Will and Testament as a backup. If you end up with real estate, your heirs will appreciate that you have at least prepared a will.
Like most states, Mississippi law provides a few alternatives to Mississippi succession — tools that can avoid or shorten the succession process. And, like most states, the practical benefit of these tools is somewhat limited.
To understand why these alternatives are only available in limited circumstances, remember that the Mississippi succession process is there for a reason. It may seem that this process was designed by bad lawmakers to complicate our lives. But that’s not quite true. The fact is that succession serves two important purposes:
- This gives third parties the assurance that the legal title has changed from one owner to another. The court’s involvement provides a sort of guarantee that those who inherit property have good title. This guarantees to third parties that the heirs or beneficiaries actually own the property, which in turn allows the heirs or beneficiaries to sell, mortgage or otherwise freely deal with the property.
- This gives third parties the assurance that there are no claims on the property. Since the process conclusively disposes of creditor claims, future buyers, lenders, or other third parties can rest assured that a creditor won’t show up at some point with a claim against the property.
Keeping these two purposes in mind will help you understand why alternatives to succession are often of limited usefulness. Without succession, third parties have no assurance of who owns the property and whether there are claims against it. This results in a cloud on title that makes it difficult or impossible to sell, mortgage, or otherwise deal with the decedent’s assets. In other words, while some of these alternatives might provide legal title, they do not always provide clear title to the decedent’s assets.
But that being said, there are some circumstances in which an alternative to succession can work. Whether these tools will be useful in your situation depends on your goals, the assets involved, and how much time has passed since the decedent’s death. The most common alternatives to succession include:
The succession process can take a year or more after a person’s death. If your estate consists primarily of real estate, usually your home, there are several methods you can use to avoid succession, allowing your beneficiaries to receive the property more quickly.
Create living trusts
Perhaps the easiest way for a person to leave real estate to beneficiaries and avoid succession is via a living trust. Also known as an inter vivos or revocable trust, the grantor or creator of the trust is referred to as a life trustee. They also appoint a successor trustee who will manage the estate after his death or loss of work capacity. The principal also mentions the beneficiaries of the trust. The owner can still use the property and even sell it, but the property is now in his trust, not in his person. When they die, trust becomes irrevocable and cannot change. Virtually any asset can be turned into a living trust.
Be aware of the basic living conditions. You cannot sell or refinance without the beneficiary’s consent. Their debts can be assigned to your home. Divorce from a married beneficiary can affect your property. Ask the heir to make a will and indicate what to do in case of death before yours.
Sale of jointly leased properties
If you are the sole owner of your property, you can put a co-tenant in the deed. When you die, the property passes automatically to the joint tenant without going through the succession process. In most states, joint tenants must have equal shares. This means that if you appoint a child as a joint tenant, for example, each owns 50 percent of the property, but if you name two children each will own 33.3 percent. If you have other assets, you can also put them in a joint tenant’s name so they will bypass succession. The downside in these cases is that the joint tenant is entitled to the property, as are the tenant’s creditors.
The properties of life are for life
The creation of an asset for life allows the owner of the property, now a tenant for life, to continue living in the property or in any case to use it for the entire period of his residence. Once they die, the property bypasses succession and goes to their named remainderman, which is another term for beneficiary. Lifetime resources are most often used by parents, and the rest is generally their child or children.
A lifetime tenant has the same obligations as when he was the formal landlord. They have to pay property taxes and a mortgage and keep the property in good condition. What they cannot do is sell or transfer the property, at least not without the consent of others and possibly their spouses, depending on state law. Medicaid’s five-year look-back period includes transfer of a property to a life estate, so if the life tenant needs to go into a nursing home within that five-year period, the life estate may be disqualified.
Use of transfer in death records
California is one of the states permitting real estate owners to use transfer on death deeds to avoid succession. Such deeds are similar to transfer on death designations attached to investment or bank accounts, which is a way a person with additional assets besides real estate can leave them to beneficiaries without going through succession. When the owner takes advantage of the death certificate transfer, he keeps the property alive, but upon delivery, the property goes to the designated beneficiary. One caveat: In California, if two people are co-owners of the property and the other owner also wants to take advantage of the death certificate transfer and replace the beneficiary, both owners must create a separate death certificate transfer.
The succession process is complex and riddled with pitfalls. If you’re like most Personal Representatives, you may be administering an estate for the first time. Based on our firm’s many years of experience navigating the Probate Court, here are 5 succession pitfalls to avoid.
Pitfall 1: procrastinate or ignore key terms.
When a loved one dies, the sheer amount of work to be done can feel overwhelming. While the estate doesn’t need to be administered immediately after death, procrastination is not wise either.
Once the decedent has been laid to rest and any funeral/memorial service has passed, it’s important to start and pursue the succession process in a timely manner. An experienced succession attorney can help you observe your duties and meet all deadlines throughout the process.
What happens if you ignore or miss succession deadlines? First, this negligence results in a succession process that takes MUCH longer than it should. The Probate Court encourages succession matters to be completed within one year of the decedent’s death. If the Personal Representative can’t meet that time frame, they must file a status report explaining the situation.
Another danger? The longer the administration, the greater the risk that your beneficiaries or heirs will be frustrated and want to sue you and replace you. The best cure for all of these problems? Hire a reputable attorney to help you perform your fiduciary duties efficiently and skillfully.
Pitfall 2: Don’t keep beneficiaries / heirs up-to-date.
Il Rappresentante personale è tenuto ai sensi del Codice di succession a comunicare ragionevolmente bene con i beneficiari e gli eredi. We encourage our customers to communicate clearly and frequently with the persons entitled to information regarding the goods.
When beneficiaries and heirs are kept in the dark, they can become anxious and frustrated. They can go to their attorney to represent their interests and potentially sue or remove a non-communicating Personal Representative. Avoid this situation by sending appropriate notifications and regular updates to everyone who is eligible to receive them.
Trap 3: sloppy or inaccurate records.
When it is time to file an invoice for your stock as a Personal Representative, accurate records will be critical to producing an additional invoice. If your accounting reflects missing funds, it could set off a red flag and raise suspicions. If you want your numbers to add up correctly in the end, it’s helpful to keep careful records from day one.
Maintaining accurate and accurate records shows that you have fulfilled all of your fiduciary responsibilities. If there are ever any allegations of misconduct, these records will excuse you by proving your innocence.
Pitfall n. 4: early distribution of assets.
As a personal representative, your job is to take an inventory of your property’s assets. When you’re ready to close the estate , you’ll file a Petition for Final Distribution with the court. Assets must be transferred to the heirs or beneficiaries only after the application has been approved by the court at the last hearing.
What happens if you redistribute real estate assets prematurely? You may become personally responsible for these activities or need to track assets to get them back. This is your main responsibility and problem. Avoid it by distributing nothing until the appropriate time at the conclusion of the succession process.
Pitfall #5: Trying to DIY a succession estate.
Most of our clients are personal representatives who come to us for help in determining the administration of the property, who have completely failed. While some bright people may be able to manage a very simple property on their own, many people eventually realize that there is a handicap. Sequences can be incredibly messy!
Which makes more sense: Finding a succession lawyer at some point down the line to fix your mistakes and hopefully prevent you from getting sued? Or hiring an experienced succession lawyer at the beginning to keep you on track and get it done efficiently? We believe that if a job is worth doing, it’s worth doing right!
If you have any questions about succession, feel free to contact our law firm. We are happy to help you avoid these five pitfalls and many more.
Daniel A. Hunt Law Firm
The Daniel A. Hunt Law Firm is a California law firm specializing in Estate Planning; Trust Administration & Litigation; Succession; and the conservatory. We have helped over 10,000 customers find peace of mind. We serve clients throughout the Sacramento region and the state of California.
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