Page 59 - July 2017 Newsletter

Probate: What it is and why you should avoid it
Probate is the process of administering the estate of someone who has died or becomes incapacitated. It exists because no one can legally sign your name, even your spouse. According to the AARP, more than $2 billion dollars is spent in probate-related expenses each year, an av- erage of 2 to 7 percent of each estate.
FOP
Benefits Plan
property, bank accounts, stock, saving certificates, personal property, etc.) to your family, friends or charitable organizations after your death — outside
of Probate Court.
• At the creation of your trust, all of your assets will be transferred from your name and titled in your
TOM TUOHY
During your lifetime, you should have a cur- rent financial power of attorney, which appoints a trust- ed person to be your agent in the event that you become physically or mentally incapable of signing your name and managing your affairs. Doing so can avoid a costly guard- ianship over your estate, which often leads to multiple un- necessary complications.
What happens at your death? Your financial power of at- torney will be of no help, as it is revoked by operation of law at your death. If you have assets solely in your name when you die, they are processed through Probate Court. A judge appoints an executor with authority to sign your name, pay your creditors and distribute your assets to your heirs. If you have a will, the beneficiaries listed in your will will most likely receive their stated share of your estate. If you do not have a will, those related to you at your death — your heirs — will receive your estate proportionately.
You should know that having a will does not avoid pro- bate. In fact, the opposite is true. If you have assets in your name at your death, they cannot be transferred to your heirs without a probate court order. The probate process can take years, and on average it will take 18 months, be- cause in large part, the system was not designed to admin- ister the estates of every person. In Cook County, there have been more than 100,000 pending cases, with fewer than ten judges to administer the case load. Also, property owned in different states must be probated in each of those states, as well as in the state where the person resided at the time of death — multiple probate proceedings.
The good news is that not all estates go through probate. So what is not subject to probate?
• Jointly held property passes to the surviving joint tenant,
often a spouse. However, when the survivor dies, there
will be probate. So joint tenancy only delays probate.
• Estates with a value of less than $100,000 can be admin- istered through a Small Estates Affidavit, outside the
Probate Court.
• Deferred compensation, life insurance, POD and other
accounts pass directly to the adult beneficiary. Howev- er, if the beneficiary is a minor, the proceeds must go to probate and be held until the minor reaches 18 years old. Also, any proceeds for a beneficiary who has a phys- ical or mental disability must also be held in probate for the duration of the disability, often for the beneficiary’s lifetime.
The bad news is, even though there are a few ways to avoid probate for some assets, rarely if ever can you avoid the probate process for your entire estate if it exceeds $100,000. Your best plan to completely avoid probate is a living trust.
A revocable living trust is a written, legal document that allows you to privately and efficiently pass your assets (real
trust.
• You retain unlimited access to and full control of your
assets during your lifetime while you have your capacity. • A revocable living trust allows you to appoint someone of your choice (as successor trustee) to manage your as-
sets after your death or during your incapacitation.
• It may be amended or revoked at any time as long as you
are mentally competent.
• Your assets and belongings will be distributed private-
ly and efficiently to your beneficiaries, under the terms
that you have established within your trust.
Call my office today to lock in your FOP 50 percent re- duced rate for a living trust. Registration in the Benefits Plan for FOP members and family is free. Visit www.fop- benefitsplan.com or call 866-729-5454 for assistance with
registering. d
Tom Tuohy is the founder of Tuohy Law Offices and the FOP Benefits Plan. He has been a police lawyer for 34 years. His father was a CPD detective, and his grandfather was CPD Chief of Major Investigations. You can reach Tom at 312- 559-8400.
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