The probate process becomes necessary when an individual passes away without leaving a joint owner or beneficiary. If an asset is just in the individual’s name, with no successor owner, then the asset would need to be probated in order for the rightful heirs to receive the money.
A common misconception is that an individual doesn’t believe they need an estate plan, because “everything will go to their spouse or their children.” While it may be true that eventually their assets go to their spouse and children, that does not happen automatically.
In a perfect situation, a spouse lists the other spouse as primary beneficiary, and then the children as contingent beneficiaries. The problem arises when people “die out of order;” or a financial institution changes ownership and the beneficiary designation doesn’t transfer. Additionally, not everyone has a spouse and grown children. If a single individual passes and doesn’t list a beneficiary (which is surprisingly common), or their beneficiary passes prior to distribution, then the asset is no longer protected from Probate Court.
For example, Jack and Jill are married with two minor children. They have a joint bank account and list their children as beneficiaries. They assume the asset is protected from Probate Court. However, they die in a car accident together. Now there is no surviving account owner and the children are minors, so they cannot access the funds. Family members have to petition the court for guardian and conservatorship of the minor children in order to care for the children and access the funds in the account.
Another example, Bob is not married, but has been dating his girlfriend for twenty years. Bob has one child that he has no relationship with. Bob has $500,000 in a 401k and lists his girlfriend as the beneficiary. Unbeknownst to Bob, the 401k company changes ownership and his beneficiary designation doesn’t transfer. The 401k has to go through probate and the sole heir is his child that he hasn’t spoken to in 18 years.
These situations highlight the importance of estate planning. The absolute best way to ensure that your assets avoid probate and are distributed to the beneficiaries of your choice, is to prepare a Trust. The Trust allows us to plan for numerous scenarios, so that your assets are protected and you are in control of the ultimate beneficiaries of your hard earned assets.
Rutkowski Law Firm: Asset Protection & Estate Planning has an excellent record of representing individuals in the probate court throughout Michigan.
Because we conduct all of our meetings online, we can assist clients who live anywhere. Take the next step to protecting everyone you love and everything you own through thoughtful planning. Call us today at (248) 792-9193, or fill out our online form to schedule a virtual consultation.
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