In the estate planning world, probate is sometimes referred to as a necessary evil. While the process can be long and costly, it is sometimes needed to make sure that an estate is divided how the decedent intended.
Essentially, probate manages the transferring of a person’s property upon his or her death according to the person’s last will and testament. But before the assets can be distributed, all of the assets have to be collected and certain debts have to paid off. Any disputes that arise also have to be settled.
The longer probate takes the more money it costs and the less the beneficiaries and heirs will end up with. That’s why it’s best to avoid probate through effective estate planning whenever possible. Here are some ways to do that from FindLaw.com:
Joint property ownership: When property is owned with the “right of survivorship” the property simply passes on to the other living joint owner without having to go through probate. States have unique laws setting forth how joint property ownership must be established.
Revocable living trusts: A revocable living trust involves transferring property to a trustee while reserving the right to revoke the trust. The trust is used for the benefit of the person who created it according to the terms of the trust, but since it is no longer part of the person’s estate it can be passed on without going through probate.
Death beneficiaries: Many common financial assets such as retirement accounts and payable on death accounts (PODs) allow the owner to name a death beneficiary. The accounts are no longer part of the owner’s estate when he or she dies and pass directly to the named beneficiary, thereby avoiding the probate process.
Gifts: One of the simplest ways to avoid probate is by giving away property before death. Although issues such as gift tax and other complications need to be considered, so it is wise to only give away smaller, less valuable assets this way to avoid probate.
An experienced estate planning lawyer in your area can provide you with additional information on avoiding probate to help save your beneficiaries and/or heirs time, money and potential conflict.