Individuals embarking on their estate tax planning can avoid the subjecting their property to the draining process of probate, according to a report in The Downey Patriot. Probate, which helps conclude a person's financial and legal affairs after they pass.
Once an estate enters probate court, a named executor then begins an exhaustive inventory of the estate. She files tax returns, pays bills and locates creditors. After all financial obligations are met, the estate can be distributed to heirs and relatives. The costs for this investigation are all taken out of the estate. This process can take months and even years in certain states, such as California.
Most estate owners will want to avoid the costs and fees associated with the probate process. According to Findlaw.com, the average cost of probate is four to 10 percent of the gross estate, and the average length of the probate process is 113 months. A court will order higher fees the more complicated an estate case turns out, according to the Patriot report.
Living trusts are one option for those who want to avoid the probate process. Others can hold their money in a "to pay on death account" in a financial institution. They can name their beneficiary, who'll inherit the money in the bank account - but only upon the passing of the person who established the account. This move avoids the probate process entirely.
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