7 Tips on How to Avoid Probate

Probate is a process that many people wish to avoid, and for many good reasons. First, it can be time-consuming and stressful at a time when a decedent’s loved ones are already dealing with grief. Additionally, it can be expensive, incurring more and more fees the longer it drags on. Fortunately, there are ways you can avoid probate and streamline the settlement of your estate. If that piques your interest, don’t go anywhere! Here are Senior Resource’s tips on avoiding probate and preserving your assets!

What is Probate?

So, let’s dive into probate! First of all, what is it? Simply put, probate is the legal process through which a deceased person’s estate is settled. It involves proving in court that a deceased person’s will is valid, paying debts and taxes, and distributing the remaining property as directed by the will (or state law if there is no will). This process ensures that the deceased person’s assets are transferred to the appropriate beneficiaries or heirs. Probate can vary depending on the jurisdiction and the complexity of the estate.

What are the Drawbacks of Probate?

Probate can be a time-consuming process, often taking several months or even years to complete. During this time, beneficiaries may not have access to their inheritance, and the estate’s assets may be tied up in legal proceedings. Also, probate can be expensive, as it typically involves court fees, attorney fees, executor fees, and other administrative expenses. Probate proceedings are a matter of public record, which means that anyone can access information about the deceased person’s assets, debts, and beneficiaries. This lack of privacy can be undesirable for some individuals and families who prefer to keep their financial affairs confidential.

How Can I Avoid Probate?

Given all the drawbacks and costliness, it’s not hard to see why people want to avoid probate! But what steps can you follow to ensure that your estate doesn’t go through the probate court? What protective measures can you take now to protect your assets for your beneficiaries? Please keep reading to read our ten tips on how to avoid probate!

1. Establish a living trust.

A living trust allows you to transfer ownership of your assets to the trust during your lifetime. You can then name yourself as the trustee and retain control over the assets. Conversely, you can appoint someone else to manage them on your behalf. Upon your death, the assets held in the trust can pass directly to your beneficiaries without going through probate. However, be mindful that there are different kinds of living trusts! For example, as the name implies revocable living trusts allow the trustor to retain control over the trust assets and make changes to the trust terms or revoke the trust entirely. Meanwhile, you cannot make changes to or revoke irrevocable living trusts. Make sure you understand each option thoroughly and make an informed decision that’s right for you and your estate!

2. Joint ownership.

Holding property jointly with rights of survivorship can bypass probate. Under those circumstances, ownership automatically transfers to the surviving co-owner(s) upon your death. Common forms of joint ownership include:

• Joint tenancy with right of survivorship (JTWROS)
• Tenancy by the entirety (for married couples)
• Community property with the right of survivorship

3. Beneficiary designations.

Designating beneficiaries on financial accounts, retirement accounts, life insurance policies, and other assets allows those assets to pass directly to the designated beneficiaries outside of probate. Make sure to keep beneficiary designations up to date to reflect changes in your life circumstances! Some life changes that may warrant adjustments to your beneficiary status include:

• Birth
• Marriage
• Divorce
• Death
• Changes in relationship with beneficiaries
• Remarriage

4. Transfer-on-death accounts.

Some assets, such as bank accounts and securities, allow you to designate beneficiaries who will receive the assets upon your death without going through probate. This is often called a payable-on-death (POD) designation for bank accounts and a transfer-on-death (TOD) designation for securities. While POD and TOD designations can be effective probate avoidance tools, they should be coordinated with your overall estate plan. Consider how these designations fit into your broader estate planning strategy and consult with experts for any questions you may have!

5. Gifting.

Giving away assets during your lifetime can reduce the size of your estate and potentially avoid probate for those assets. However, be mindful of gift tax implications and consult with a tax professional or estate planning attorney before making large gifts! An estate planning attorney can advise you on the legal aspects of gift-giving, including the impact on your overall estate plan. Be mindful of the financial implications for the recipients of your gifts! Do they have the resources to manage your gifts? Will your gifts align with their own financial goals and needs? While we’re certain you’d mean well with any gift that you gave your beneficiaries, you don’t want to create stress for them in the long run!

6. Small estate affidavits.

Many jurisdictions have simplified probate procedures for small estates that fall below a certain threshold value. If your estate qualifies, your beneficiaries may be able to use these procedures to transfer assets without going through the full probate process. Many states allow you to achieve this through small estate affidavits. However, be mindful that each jurisdiction has different rules on what constitutes a small estate. If you’re trying to settle a decedent’s estate, ask yourself the following questions to determine legal eligibility:

• Does the deceased person’s estate qualify?
• Was there a will?
• Am I allowed to use the affidavit?
• Has enough time passed?
• A strong estate plan 

7. Consult an estate planning attorney.

Let’s face it—estate planning is complex! Of course, probate laws also vary from state to state and area to area. The solution? Seek guidance from an experienced estate planning attorney. They can help you develop a comprehensive plan tailored to your specific needs and goals. Additionally, estate planning documents, such as wills, trusts, and beneficiary designations, should be reviewed periodically to ensure they accurately reflect your current intentions and circumstances. Estate planning attorneys can use their knowledge and expertise to help you navigate changes in laws and regulations and keep your estate plan up-to-date and valid!

Takeaway

By avoiding probate, assets can be transferred to beneficiaries more quickly and effectively, reducing time and cutting costs. Remember to seek guidance from experienced estate planning attorneys to explore probate avoidance options and develop the perfect estate plan for you and your beneficiaries. Last but not least, educate yourself about the probate process. Understanding all your options can not only empower you, but it can also protect your assets for future generations!

Still on the hunt for more great articles like this? Be sure to check out these before you go:

• Trusts in Estate Planning: 6 Essential Things You Need to Know
• At What Net Worth Do You Need a Trust?
• How to Invalidate a Will
• 9 Things to Know about Writing a Will
• What Happens If You Die Without a Will?
• Revocable Living Trusts: The Good, The Bad, and The Ugly Truths for Estate Planning

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