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Estate planning strategies to avoid court probate

Law Offices of Yu & Associates

Probate in the U.S. is a complicated proceeding, and it is time-consuming and expensive. In Maryland, attorney's fees and executor's fees are governed by state statutes. These fees are paid out of estate assets, and final fees must be approved by the court. The current state formula for executor and/or attorney compensation is 9% on the first $20,000 of the estate assets and 3.6% on the remainder of estate assets. Generally speaking, probate also involves paying various fees for appraisers, accountants and courts. Maryland probate fees can run into the tens of thousands of dollars in complex cases. However, Maryland probate fees can be avoided or reduced with some simple and appropriate strategies. Here are some ways you can consider to avoid the probate process:

1. Establish co-ownership of property

Probate can be avoided if you and your future heirs jointly own the property, and the ownership falls into the right of survivorship as follows:

  • Joint tenancy with right of survivorship. The joint property will be directly transferred in full to another owner.
  • Tenancy by entirety. This is a joint property right between spouses.
  • Survivorship community property. In some states, properties acquired during marriage have the right of survivorship.

2. Establish a revocable living trust

Setting up a revocable trust is a practical, effective and simple way to avoid court probate. A revocable living trust allows you to own and control your property while you are alive, and you can make decisions on the assets within the trust. After your death, the trustee you designate in the trust manages the assets in the trust according to your instructions, and distributes the assets to the beneficiaries of the trust as directed. Revocable trusts are flexible and controllable, and can achieve the purpose of avoiding probate.

3. Designate a beneficiary

Designating your beneficiary on some financial products can also effectively avoid court probate. It is a simpler and more feasible method. You can designate the beneficiary of your life insurance, annuity or retirement plan, so when you pass away, the property goes directly to your beneficiary without the need for court probate.

The above is a general introduction, and should not be construed as individual legal advice. For specific legal questions, please contact the Law Offices of Yu & Associates. Tel: 301-838-8986, Fax: 202-595-1918; E-mail: syu@yulegal.com, Address: 110 N. Washington St., Suite 328E, Rockville, MD 20850. (All rights reserved.)

Ó Yu & Associates LLC, 110 North Washington Street, Suite 328E, Rockville, MD 20850, USA. Tel: 301-838-8986