Avoid probate with estate planning

Plus, how advance funeral planning can help you and your loved ones

When it comes to having your affairs in order, some methods may make more sense for you than others. If done correctly, end-of-life planning — or estate planning — can help relieve the financial and emotional burden left behind after your death. Proper planning can also reduce and simplify the forms your loved ones need to complete after you die. Although many steps are involved with estate planning and it can be time-consuming, it can be beneficial in the long run, especially if you can avoid probate.

Checklist: what to do when someone dies

What is probate?

Probate is the court-supervised, public process through which a will is executed and the estate is settled. The probate process can take a long time, and beneficiaries can’t receive their inheritance, including property and funds, from the estate until probate is finished. The process can also be costly, especially if you need to hire a probate attorney, and a portion of the estate could go to the court to cover fees. After the probate process is complete, everything in the estate, including the value and the inheritor, becomes public record. These are just a few reasons why you want to avoid probate.

How to avoid probate

Michael Horn, attorney with Horn Law Offices in Des Moines, Iowa, said one of the easiest ways to avoid probate is by establishing ownership of real estate or other property with joint tenancy with rights of survivorship, so the assets can just transfer to the other owner upon your death. You can also make transfer-on-death designations for securities and property.
 
“Financial assets can avoid probate and be easily transferred to another person through joint ownership of accounts, Pay-on-death (POD) accounts, or by listing beneficiaries in a life insurance policy,” Horn said. Some people prefer PODs to joint ownership of an account because the POD beneficiary has no rights in the property until death occurs.
 
Horn said you can also avoid probate by creating a trust. A trust establishes a separate legal entity that owns your assets, so the trust still exists and can transfer your assets without going through probate when you die. Trust rules are more complex, so you will want to talk with an attorney about them.
 
Horn said it’s best to make arrangements to avoid probate as early as possible, and he suggested giving away some assets during your lifetime.
 
“But you need to be careful of IRS tax gift limits,” he added. “You also need to be aware of Medicaid look-back periods.”
 
Medicaid has a look-back period of five years, and if you’ve given away assets in that time, it may affect your eligibility. If you’re concerned about your Medicaid eligibility, Horn suggests talking with a probate or elder law attorney before giving away assets.

Advance funeral planning

Wills are typically read after a funeral or memorial service. This is one of many reasons why advance funeral planning makes sense. With advance funeral planning, you can arrange and pay for your own funeral. Great Western Insurance Company offers two life insurance policies that make advance funeral planning easy: Preneed Funeral insurance and Final Expense insurance.

The story of your life: don’t wait another day to tell it

Preneed Funeral insurance

Preneed insurance is used to fund a funeral service agreement between you and a funeral home. You decide every element you want included in your funeral service, which includes everything from the casket or urn to transportation for the family. The funeral home partner totals the costs, and that amount is the basis for your Preneed insurance plan. You can either pay the amount in one installment or through monthly premiums. Upon your death, the funds are used to pay the funeral home for your funeral.

Find a Preneed funeral home partner in your state

Final Expense insurance

Final Expense insurance not only covers the costs of your funeral service, but it also covers any expenses your loved ones may face following your passing. These can include outstanding medical or credit card bills, estate taxes, legal fees, and living expenses. However, it doesn’t retain preplanned funeral costs at present-day amounts, and you’ll need to thoroughly list your wishes for how you want to be remembered.

Get a FREE Final Expense insurance quote

Since the two life insurance plans vary, one option may be better for you than the other. Talking with your loved ones about estate planning and advance funeral planning could help determine which plan is the best fit for you.
 
Disclaimer: This article is for educational purposes only. It is meant to give you general information and a basic understanding of the law, not to provide legal advice. By using this website, you understand that there is no attorney/client relationship between you and the publisher. This website or article should not be used as a substitute for competent legal advice from a licensed professional attorney in your state or jurisdiction. This article is not published for advertising or solicitation purposes. Regardless, the hiring of a lawyer is an important decision that should not be based solely upon advertisements.

This article may contain links to third party websites, but Great Western Insurance Company is neither responsible nor liable for their content, accuracy, or security. Review our Terms and Conditions to learn more.

Photo credit: iStock

Estimate your funeral expenses

Our funeral expenses calculator can help estimate your burial and end-of-life expenses and show how those costs could be affected by inflation over time. The data can help you determine whether Final Expense or Preneed Funeral insurance will meet your needs.

Calculate Your Funeral Expenses

Request a FREE Funeral Planning Guide

Do you need help preplanning your final wishes? Request a free copy of our Planning Guide.

Preneed Funeral Insurance

Save your family from a financial burden by prearranging your funeral with Preneed insurance.

Related articles

How senior life insurance needs change as you age

As you age, your financial situation changes. But one thing you probably haven’t considered is how your life insurance needs will change as you get older. The fact is, different types of life insurance fit your needs at various stages of your life.

Read more

10 FAQs about preplanning a funeral

If you do not know what to expect in the process of preplanning a funeral. The answers to these common questions people have may help you feel less stressed and more informed about planning a funeral in advance. 

Read more

Cremation vs. burial: Which is right for you?

You'll want to consider more than funeral costs when choosing between cremation vs. burial.

Read more