Probate is a critical legal process for handling someone’s assets when they pass away. The court oversees the allocation of assets, consuming time and resources. While this process serves as a vital framework for estate management, alternative estate planning options enable your estate to bypass probate. Doing so is advantageous because probate can experience delays and become messy. Here’s how to avoid probate in Ohio to better protect your assets.
A financial advisor can help you create an estate plan to protect your assets for your beneficiaries.
What Is Probate?
Probate is the legal process through which a court validates a deceased person’s will. It involves the formal recognition and distribution of a person’s assets and properties according to their will. And in the absence of a will, it will do so in compliance with the laws of inheritance in the jurisdiction.
The process usually begins with the filing of a petition in the probate court. The executor named in the will performs the filing. If there is no will, an administrator appointed by the court takes up the role.
During probate, the court notifies the heirs (people entitled to inherit the deceased person’s assets) and creditors (those seeking payment for a debt from the deceased) of the deceased person’s death. Meanwhile, the executor takes an inventory of the deceased person’s assets and has them appraised to determine the estate’s total value.
Then, the executor uses the estate to pay the deceased’s taxes and debts. After settling these expenses, the executor distributes the remaining assets to the heirs according to how a probate judge interprets the terms of the will.
Why Should You Avoid Probate?
Probate can drag on and cost your beneficiaries time and money. Here’s how it can drain your estate’s resources and keep your beneficiaries from receiving what you intend for them.
Probate Is Public
When an estate goes through probate, the details become a matter of public record. As a result, the deceased’s financial dealings, chosen beneficiaries and debts become accessible to anyone. In addition, disputes from other parties and family conflicts over money can become part of the public record, depending on their relevance to the distribution of assets. This lack of privacy is problematic for individuals and families who prefer to keep their financial affairs confidential.
Probate Is Costly
The probate process typically involves fees for the court, attorneys, executor duties, appraisals and more. An uneventful probate may cost several hundred dollars, a minor cost for most estates. However, legal battles that family members or creditors initiate can involve numerous lawyers and countless hours, increasing probate costs by tens of thousands of dollars. The estate funds these expenses, diminishing the assets that ultimately go to the heirs.
Remember, estate planning isn’t free. That being said, paying a modest amount upfront prevents the exorbitant cost of probate when family members are fighting it out, or a decades-old business has to close due to disputes after the owner passes away. Putting your estate through probate exposes your assets to these dangers.
Probate Takes an Indeterminant Amount of Time
Probate in Ohio usually takes about six months, but complicated cases can extend to years of legal deliberation and decisions. During this time, the beneficiaries must wait to receive their inheritances. This delay can be particularly burdensome for those who rely on the deceased person’s assets for financial support. Additionally, disputes can prolong the probate process. On the other hand, a trustee distributing assets through a trust doesn’t face the same delay and mandatory legal processing.
How to Avoid Probate in Ohio
Probate can be a complex and time-consuming process involving various legal procedures and fees. You can avoid probate in Ohio with the following strategies:
Survivorship, also known as joint tenancy with rights of survivorship, allows two or more individuals to own property or assets. When one of the joint owners passes away, their share automatically transfers to the surviving owner(s) without going through probate. This tool is helpful for real estate, bank accounts, and investment accounts.
Transfer on Death Designation
A transfer on death designation is a legal arrangement allowing an account or asset holder to name a beneficiary who will inherit the asset upon death. You can apply this designation to various assets, including vehicles, real estate and businesses. Remember, businesses such as LLCs can also own non-titled assets, including farm equipment and livestock. When the account holder passes away, the asset is transferred directly to the named beneficiary, bypassing the probate process.
Payable Upon Death Accounts
Payable Upon Death accounts are financial instruments with a beneficiary that the owner designates. Upon the account holder’s death, the funds in the account are automatically transferred to the named beneficiary. Life insurance is designed to work this way, but you can also designate beneficiaries for other types of financial accounts. Doing so can ensure that a specific individual receives the funds in the account without going through probate.
A living trust is a legal arrangement in which a person (the grantor) transfers their assets into a trust during their lifetime, naming themselves as the trustee and specifying beneficiaries. Upon the grantor’s death, a successor trustee (named in the trust document) takes over and manages the assets on behalf of the beneficiaries. Since the trust owns the assets, nothing goes through probate. As a result, the trust allows for a smoother, more private and potentially faster distribution of assets.
Probate in Ohio can be a time-consuming and costly process. It exposes your financial affairs to public scrutiny and can lead to significant delays in distributing assets to your intended beneficiaries. However, by employing strategic estate planning tools, you can circumvent the probate process altogether. Options like survivorship arrangements, transfer on death designations, payable upon death accounts and living trusts provide control, privacy and efficiency. Remember, consulting with an estate planning professional in Ohio can help you tailor these strategies to your specific circumstances, safeguarding your legacy for the benefit of your loved ones.
Tips for Avoiding Probate in Ohio
- Avoiding probate in Ohio is only advantageous if you do so by creating a detailed estate plan. A professional can help you establish a trust and designate beneficiaries for life insurance and other assets. If you don’t have a financial advisor yet, finding one doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Transferring your wealth outside of probate is helpful for your beneficiaries, but it doesn’t automatically eliminate taxes. Fortunately, there are strategies to help you avoid estate tax when your estate distributes your assets.
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