The probate process can be complex, expensive, and stressful; the good news is that there are ways to ensure certain assets avoid the probate process upon your death.
What Is Probate?
Before you take steps to avoid probate, make sure you have an understanding of what the probate process is actually is.
“Testate Probate” is the court-supervised process of proving the validity of a Will. If someone dies without a Will, the assets still go through an “Intestate Probate.” There is no need to prove the validity of any estate planning documents, but there is a need to clarify the succession of heirs/devisees for the court.
The probate process also requires an inventory of the deceased’s assets and debts. The estate must use the assets to pay off the debts. After that, any asset that does not already have a beneficiary designated, must go through the court’s probate process before it can be distributed to the heirs/devisees.
Probate Is Public
Probate is not a private process. The act of filing documents with the court makes the case and all associated filings public record. The thought of “airing dirty laundry” might be daunting to some families, but there are many methods to avoid probate.
How Can I Avoid Probate?
Primarily, any property that was owned solely in the name of the deceased will pass through probate. However, with the right planning, even those assets can avoid probate.
· Account Beneficiary Designations: Many financial institutions, life insurance policies, and retirement accounts allow the owner to designate beneficiaries of the account(s) while they are still alive. After the owner’s death, the account passes directly to the beneficiary they designated and avoids probate.
· Real Property Deeds: Many states allow for Beneficiary deeds or Transfer-On-Death deeds. This allows an owner of real property to execute a deed that names a beneficiary who will obtain title to the property at the owner’s death without going through probate. The deed gets recorded while the owner is still alive in the county where the real property is located.
· Title Assets with Rights of Survivorship: Assets that are owned jointly with right of survivorship will pass directly to the surviving owner and avoid probate. This is a common way for married couples to hold title to real property and bank accounts.
· Set Up a Living Trust: A living trust is an entity created during your lifetime to hold assets, for the purpose of distributing them after your death. Unlike a Will, living trusts are not usually subject to the lengthy, legal, public, and expensive probate process.
To learn more about the probate process, or how to avoid it, contact a law office for a free consultation with an estate planning lawyer.