Philadelphia Wills Attorney Explains the Pros and Cons of Probate
April 4, 2022
Many people visit a Philadelphia wills attorney in an effort to avoid probate. The truth is that the benefits of avoiding probate are often overstated by those who provide non-probate assets; for example, banks, insurance companies, and brokerage firms. These organizations may emphasize the value of avoiding probate in order to better promote their products. They are rarely involved in the probate process, but instead primarily deal with surviving spouses or dependents.
One of the biggest disadvantages of probate is that it can take a great deal of time to probate a will. As such, it could take months or even years to fully settle an estate. The reason is because there are a certain set of rules which must be followed to ensure beneficiaries are adequately protected. You will likely need assistance from a Philadelphia wills attorney, since the probate process is extremely cumbersome.
Those who wish to avoid probate entirely have a number of options available, many of which do not require a Philadelphia wills attorney in order to implement. These options include:
Creating joint tenancies for real property
Setting up joint bank accounts
Establishing a living trust
Contributing to certain retirement plans such as IRAs and Keough's
Buying life insurance
While these options may allow you to avoid probate, there is nonetheless some risk associated with using them. For example, adding another person’s name to your bank account can allow him or her to make unauthorized withdrawals. It is also more difficult to plan for contingencies when using non-probate accounts. Furthermore, tax planning may not be needed if your assets automatically pass to your surviving spouse upon your death.
Real Estate Risks
Avoiding probate by creating a joint tenancy that will allow it to pass to the surviving owner can also result in some negative consequences. The survivor could be subject to gift taxes, because there has actually been a completed gift. This completed gift could use up all or part of that person’s gift tax allowance under Section 2505 of the Internal Revenue Code. Other tax liability could also be realized due to the fact that the exclusion on capital gains tax may be severely reduced or even eliminated altogether. In certain situations, creditors of the person whom you added may also attach a lien on the property
Need Help with Probate Issues? Contact a Philadelphia Wills Attorney Now
If you need assistance in navigating through the probate process, contact a Philadelphia wills attorney from Caiazzo Law.