5 Ways to Avoid Probate

Probate is a legal process that occurs after you pass away. Basically, a court supervises the distribution of your assets and ensures that debts and taxes are paid. The vast majority of estates must go through probate court when a person dies. Fees from this process include things like court fees, attorney fees, filing fees, and accounting fees. The cost usually ends up in the thousands. Needless to say, it’s a long and expensive process that many try to avoid as much as possible. No one wants their loved ones caught up in months-long proceedings while also mourning. So, let’s talk about a few ways your estate can avoid probate.

1. Living Trust

A living trust is a legal document that holds assets on behalf of the person who creates it. While alive, the person who created the trust controls and manages the assets. After their death, the assets are distributed to beneficiaries as specified. Assets within your trust do not pass through probate.

2. Joint Ownership

Joint ownership is simply when two or more people own a property together. If one of those people dies, the ownership automatically transfers to the surviving owner.

3. Payable on Death (POD) Accounts

A Payable on Death (POD) account is a bank account where the client designates a beneficiary who would receive all of the funds in the account after the owner’s death. Assets from this type of account are immediately transferred to the beneficiary upon your death, therefore eliminating the need for probate.

4. Small Estate Affidavit

In some states, a small estate affidavit is an option to avoid probate. It’s a sworn statement saying that the value of all of the assets falls below a certain amount. This allows beneficiaries to collect and distribute an estate’s assets without going through probate court. Every state has a different definition of what qualifies as a small estate, but it’s usually worth investigating where you live!

5. Gifting

Gifting allows you to transfer assets to your beneficiaries while you’re still alive. It’s that simple, really. However, keep in mind that depending on the size of the gift, it may be accompanied by tax consequences.

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