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 Estate Planning After death, what happens? In most states - Probate Court. After you die it is critical to understand that your will most likely will end up in a court probate proceeding. We have discussed this at length throughout the Wills section of this material. Can Probate Be Avoided? Yes. There are many ways of avoiding the lengthy delays and expenses of probate court. Several include:(1) holding property as Joint Tenants; (2) life insurance beneficiary designations, which in most cases are paid outside the probate court proceeding to the beneficiary designated; (3) pension plans, with both federal and state law rules governing the particulars, can often be passed outside of probate proceedings; and (4)as we have mentioned, trusts. Each of these can transfer property outside of probate. What is important to understand is how each of these works. Be Careful When You Attempt to Avoid Probate It is critical to understand that if property transfers outside of your probate this can lead to harmful results, if you do not plan well. For example, recently I learned of a case in which a person with a $100,000 life insurance policy made the beneficiary his adopted child of his spouse. Divorce and remarriage ensued. In fact, the second marriage brought three of his own children to the man with his second wife. He made a will and provided for the disposition of his estate to his second spouse and his three children. However, he neglected to amend the beneficiary of his $100,000 life insurance policy. At his death, instead of the proceeds being "poured into his estate", the insurance company made a check for the $100,000 to the adopted child of the first marriage, and left nothing for the estate. While it is possible to contest this situation, you can see that there will be at least two hurdles: (1) How to afford the legal fees to retain an attorney to institute a lawsuit for the proceeds of the policy; and (2) a lengthy court battle, which will exhaust you and your resources. Remember, you do not yet have the $100,000 to spend for a lawyer. You are in a whole different situation when you are suing to recover monies which you believe you are owed. A real hurdle in this case is the fact that you might not win in any event due to the failure to amend the beneficiary designation. Remember how easily prevention of this problem was: One call to the insurance company, and the completion of a one-page Change of Beneficiary Designation Form (and a stamp).
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