Very few Americans know how long it takes to settle an estate or how probate works and are surprised when their inheritance takes months, if not years, to arrive. This, according to an article from USA Today, “Inheritance on hold? Most Americans don’t understand the time and expense of probate,” may become a problem over the next twenty years. During that time, boomers, who control about half the wealth in America, will be passing, and as much as $84 trillion is expected to move from one generation to the next.
Most inheritances are expected to go to millennials, who don’t know if their parents have an estate plan. Only half have spoken with their parents about estate plans, and more than half of all millennials don’t have a will or trust in place.
The tendency to avoid what we don’t understand, plus our discomfort with talking about money and death, is something to overcome, say estate planning attorneys.
The first parent to die isn’t where most people encounter probate. If the parent had an estate plan created, their will usually passes most assets to the surviving spouse or to a trust set up for beneficiaries. However, when the second parent dies, the adult children are the ones to deal with serving as executors, selling the family home, paying estate taxes, and waiting for probate to be finished before receiving their inheritance.
Some accounts pass by beneficiary designations, where the account owner names the people, they want to receive the asset upon their death. These assets don’t go through probate and are more straightforward for heirs.
State laws differ, so if your parents live in another state, the will is probated where they live. If there is no will, the court will apply state laws to distribute property, and the family won’t have any say in what happens to a person’s property, which could include items with great sentimental value, investments, and real estate.
Step one is working with an experienced estate planning attorney to create an estate plan to avoid or minimize probate. The estate plan also includes documents to control who will manage assets if a person becomes incapacitated, as well as who will manage their medical care. These documents are Power of Attorney and Health Care Power of Attorney.
Talking with parents, or parents talking with their children, about estate plans, is very important for all concerned, even if it is difficult. If children live in different stages, an online gathering is better than waiting until everyone is together for a holiday.
