how to avoid probate

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piton
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Joined: Sat Nov 24, 2018 7:11 pm

how to avoid probate

Post by piton »

If a single senior living in IL does not own any real estate, and assets are limited to a brokerage account, a bank account and an IRA, is it possible to avoid probate by listing the inheritors (two kids) as beneficiaries POD for the brokerage and the bank account? I believe the IRA will transfer easily if the kids are the listed beneficiaries. 

This seems straightforward enough to me that this might be the simplest thing to do versus e.g., having a trust. 

Does this make sense? This is not a large estate and there are only two beneficiaries that are people.

thx
frankbrenowitz
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Re: how to avoid probate

Post by frankbrenowitz »

All of our financial assets ( bank, IRAs, 401(k)s, and brokerage) are set up as POD. The house and cars are in a trust. The personal effects belong to whoever steps over the body first. Nothing else to probate.
Topic Author
piton
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Re: how to avoid probate

Post by piton »

Do you know what's required for the transfer if using the POD option? I'd like to hear if somebody has been a beneficiary using POD and how the transaction went, if there's any lawyer involvement or if you can just do it through the institution.
Lee_WSP
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Re: how to avoid probate

Post by Lee_WSP »

You should designated beneficiaries for your retirement accounts.

As for the rest, probate need not be difficult or costly and you'll have debts and leftover miscellaneous items to deal with via probate anyway. So it's not completely avoidable.
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CAsage
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Re: how to avoid probate

Post by CAsage »

Probate for a simple estate is 100% avoidable. My Parent died 2016, left a Vanguard brokerage account POD to me and a sibling. Trivial transfer - we sent in the death cert, they split the funds. Small BigBank checking account, left POD to me. I transferred that cash into my personal account, to pay Parent's final expenses (closeout utilities, one month rent to clean out apartment, last credit card, cremation). I even filed Parent's final tax return without formally going to court to get appointed executor - the IRS permits that. Most objections to skipping probate validly focus on the risk some heirs take if the money is "gone" to other siblings/heirs and one is left stuck with the bills. That was not an issue for us, and you will have to decide for yourself. Note probate difficulty varies by state, is a nightmare in CA, and much worse with COVID.
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.
Big Dog
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Re: how to avoid probate

Post by Big Dog »

piton wrote: Wed Apr 07, 2021 4:12 pm Do you know what's required for the transfer if using the POD option? I'd like to hear if somebody has been a beneficiary using POD and how the transaction went, if there's any lawyer involvement or if you can just do it through the institution.
PoD/ToD is extremely easy for simple estates. The bank/brokerage will usually transfer the assets within a few days of receiving a certified death cert. No lawyer involved. When my parent passed, I just called up Vanguard adn informed them, adn they said, 'sorry for your loss, send us the death cert to xx address'. The assets were transferred to my account 3 days later. My sister, the other benie, did not have a Vanguard account so they helped her set one up while we were waiting for the death cert, so when they were delivered, she had her own account to recieve the proceeds.

Note, Vanguard even got the stepped-up cost basis correct.
As for the rest, probate need not be difficult or costly and you'll have debts and leftover miscellaneous items to deal with via probate anyway. So it's not completely avoidable.
CA allows heirs to skip probate for estates less than ~$160k. Perhaps your state has something similar.
123
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Re: how to avoid probate

Post by 123 »

As already mentioned used POD/TOD/beneficiaries on all financial accounts can make things really easy for survivors. This works well as long as all the inheritors are adults and you timely adjust things for marriages/divorces/deaths that happen along the way. It is important to periodically (maybe every 3 to 5 years) verify that the custodians of your accounts have the beneficiaries correctly identified. Many financial organizations periodically upgrade/adjust/replace their computer systems and its possible for data to get lost during those conversions. Data losses can occur for unanticipated reasons during automated conversions and some conversions also involve manual procedures that can be messed up as well.
The closest helping hand is at the end of your own arm.
bsteiner
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Re: how to avoid probate

Post by bsteiner »

That should be fine if the estate is small, the children will cooperate in paying any debts, taxes and expenses, there's no one else you want to provide for. You may want to provide that if a child predeceases you, his/her share will go to his/her children rather than to your surviving child.

However, if one or more of the above isn't true, then it may not work.

If the estate isn't small, you may want to provide for your children in trust rather than outright, to keep their inheritances out of their estates for estate tax purposes, and to protect their inheritances from their creditors and spouses, and Medicaid.

Is it difficult to probate a Will in Illinois? In most states, probating a Will and dealing with the probate court isn't particularly difficult, expensive or burdensome.
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OAG
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Re: how to avoid probate

Post by OAG »

piton wrote: Wed Apr 07, 2021 4:12 pm Do you know what's required for the transfer if using the POD option? I'd like to hear if somebody has been a beneficiary using POD and how the transaction went, if there's any lawyer involvement or if you can just do it through the institution.
When my DW passed all POD moved as designated, no lawyer(s), no hassles, was all accomplished within 3 days of providing copies (not certified) of the death certificate. That was 3 different Credit Unions and all was accomplished on-line and/or via phone (no brick and mortar available). All current assets are POA, no real estate and car(s) will move to beneficiaries via the state furnished TOD form already completed (just had to be notarized).
OAG=Old Army Guy. Retired CW4 USA (US Army) in 1979 21 years of service @ 38.
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Peter Foley
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Re: how to avoid probate

Post by Peter Foley »

I would think that having a joint checking account would be helpful in resolving any estate settlement issues. It is not particularly complicated to have a joint checking account as well as a checking account with named beneficiaries. This approach worked very well in the initial phases of settlement of my mother-in-law's estate.
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