Probate Lawyer
As a probate lawyer will share, probate is a process that occurs after a person passes away and their estate is administered. While the process can be time-consuming, expensive, and stressful, it ensures that the will is validated and the estate is properly resolved. As such, many people explore strategies to avoid probate to make things easier for their heirs. Fortunately, our team from W.B. Moore Law shares some of the most common ways to avoid probate.
Revocable Living Trusts: A revocable living trust is one of the most common and effective ways to avoid probate. By transferring ownership of your assets into a trust, they are no longer subject to probate upon your death. As the grantor, you retain control over the trust and its assets during your lifetime, and you can amend or dissolve the trust at any time. Upon your death, the assets are distributed to the designated beneficiaries according to the terms of the trust without going through probate.
Joint Ownership: When assets are jointly owned, the surviving owner automatically becomes the sole owner when the other owner dies, a process known as the right of survivorship. This is common with real estate, bank accounts, and other valuable assets. There are two main types of joint ownership: joint tenancy and tenancy by the entirety (the latter is only available to married couples in certain states).
Payable-On-Death (POD) and Transfer-On-Death (TOD) Designations: POD and TOD designations allow you to name a beneficiary who will receive the asset directly upon your death without going through probate. POD designations are commonly used for bank accounts, while TOD designations can be used for securities and, in some states, real estate and vehicles.
Gifts: By giving away assets during your lifetime, you reduce the size of your estate and, consequently, the assets subject to probate. However, this strategy requires careful planning due to potential gift tax implications.
Life Insurance: The proceeds from a life insurance policy are typically not subject to probate if you have named a beneficiary. Instead, the money goes directly to the beneficiary after your death.
Retirement Accounts: Like life insurance, retirement accounts usually allow you to name a beneficiary. The assets in these accounts then bypass probate and go directly to the beneficiary.
Small Estate Provisions: Many states have simplified probate procedures or exemptions for small estates. These provisions differ by state, so you need to check the laws in your state to see if your estate could qualify.
Community Property with Right of Survivorship: In some states, spouses can hold property as community property with the right of survivorship. If one spouse dies, the property automatically transfers to the surviving spouse without going through probate.
While these strategies can help avoid probate, it’s essential to remember that they may not be suitable for everyone. What works best depends on various factors, including the size of your estate, your financial goals, your family situation, and your state’s laws. For instance, while gifting assets can reduce your estate’s size, it could trigger a gift tax or diminish your financial security.
Before deciding on a strategy to avoid probate, consult a qualified estate planning lawyer who can guide you through the process and help you choose the best approach based on your circumstances. This will ensure that your assets are protected and that your loved ones will be taken care of after your death.