- 1 Property Inheritance
‘Beneficiaries’ is a term used within a last will and testament to bequeath specific assets through inheritance. When establishing a will, individuals can assign beneficiaries to receive titled property such as real estate, personal belongings, and monetary gifts.
Beneficiaries typically include spouses, children, siblings, parents, distant relatives such as cousins, aunts, and uncles, but can also include non-profit organizations and institutes of higher education.
Lastly, beneficiaries can be designated to receive monetary funds through bank accounts, financial portfolios, and life insurance policies. Although these gifts are part of the estate, the process for distribution varies from bequeathing assets through a Will.
Distribution of inheritance can occur promptly when assets are transferred to a trust. Otherwise, the estate will have to endure the probate process before inheritance gifts can be distributed.
When banks repossess real estate and sell it for less than owed on the loan, lenders can pursue home owners for monetary deficiency between the sale price and loan balance. Mortgage lenders can submit creditor claims against probated estates. To pay deficiency amounts, estate administrators are required to sell other types of inheritance property to cover the debt.
This is not to say that mortgage lenders would take this type of action, but if they choose to do so, heirs will not receive the gifts bequeathed to them through the Will.
The only way to avoid probate is to establish a trust. All assets placed inside a trust are no longer considered part of the estate and therefore exempt from probate. Better yet, inheritance gifts can be distributed within a short period of time and are often exempt from inheritance taxes.
The downside of trusts is they are normally reserved for estates valued over £100k. The good news is, individuals with smaller estates can engage in estate planning strategies to keep specific types of property out of probate.
For example, individuals with checking and savings accounts can assign beneficiaries to receive account proceeds upon death. The only requirement is to fill out a form at the bank which includes beneficiaries’ names, addresses, date of birth, and social security number.
The same strategy can be used to assign beneficiaries to receive proceeds of financial investments and retirement accounts. With these types of accounts, beneficiaries can elect to cash out the accounts or transfer funds into a new account under their name. The latter method allows beneficiaries to avoid inheritance taxes.
Beneficiaries can also be assigned to titled assets such as Real Estate and motor vehicles. The method used depends on state laws where decedents resided.
It is always best to consult with a probate attorney or estate planning specialist to ensure inheritance gifts will end up in the hands of named beneficiaries.
The term “Probate Property” is typically a residential house or home of a family member who has passed away leaving Real Estate to family members in their will. These types of properties are more often than not left to siblings or grandchildren who then need to decide whether to rent of sell the property.
This decision alone is difficult but the sell option is usually the preferred choice as benefactors of the will do not like, or have experience of Landlord responsibilities that come with renting. These responsibilities come with legal consequences as well as the hassle of keeping an occupied asset and rent coming in. What happens when the boiler breaks or tenants don’t pay the rent? Do you want these responsibilities? Maybe not
Even though the preferred choice is the sale of the inherited asset, this can also bring with it unwanted expense and stress if the asset is in a poor state of repair. Money may need to be spent updating before you can attract interest from potential buyers and this alone can become a time consuming exercise before you can release the cash tied up in the asset.
What happens if the property is in a different part of the country? How about finding reliable builders to complete the work? Who is going to manage the process if you are living miles away?. These questions need to be addressed when deciding on the best course of action for all involved.
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Probate Property – A Definition
1. Individual assets
Individual assets embody all property titled within the decedent’s sole name, with none alternative house owners or a due on death or similar kind of beneficiary designation. varieties of assets which will be titled this manner embody bank accounts; investments like stocks and bonds, cars etc etc and of course business interests and land.
2. Tenant in common assets
Tenant in common assets embody all property titled within the decedent’s individual name as a tenant in common with others. varieties of assets which will be titled this manner embody bank accounts; investments like stocks and bonds, cars etc etc and of course business interests and land.
Note: If the deceased person re-titled their tenant in common interest into the name of their revocable inter vivos trust before death, then this has regenerate the tenant in common interest into a non probate quality that will not be subject to a court continuing.
3. Beneficiary assets with predeceased beneficiaries or no selected beneficiary
Beneficiary assets embody a due on death or similar kind of account; a Health Savings or Medical Savings Account; a life estate; a life assurance policy; a programme, together with associate degree IRA or associate degreed 401(k); or an rent, wherever all of the named beneficiaries of the account or policy have predeceased the deceased person, or wherever the deceased person did not name any beneficiaries in the least.