Avoiding Probate

Learn How to Avoid Probate


  • Expensive
  • Time Consuming
  • Public Record
  • Bypasses Probate

We have clients ask several times a week, "How do I avoid probate?" It makes sense; most people want to keep their personal and financial affairs private, save every dollar they can, and get legal matters settled as quickly as possible. In other words, most people want to avoid probate.

Avoiding Probate

You can avoid probate:

• With a fully funded revocable living trust. This is the simplest way to avoid probate because there is no down side except for some upfront paper work, but your estate planning attorney can handle that for you. Note that the trust must be fully funded. This means that all of your assets are titled in the name of your trust. Learn the difference between revocable and irrevocable trusts.

• An asset protecton trust removes property from your name, and thus remove it from the probate estate.

• Jointly owned assets have a survivorship feature, meaning that upon the death of the first joint owner to die, the asset transfers automatically, by operation of law, to the surviving owner. In other words, jointly owned assets avoid probate, but only on the first death.

• Any assets that you give away during you lifetime avoid probate. If you don't own it, it's not in your estate. However, only give away assets that you really will never need during your lifetime.

• Life insurance and retirement assets avoid probate if you have a designated beneficiary. This means that you name an individual as your beneficiary, not your estate. Life insurance and retirement assets are ruled by contract law.

• Any assets that you own with a transfer on death (TOD) or payment on death (POD) designation also avoid probate. They transfer by contract to the named beneficiary.

• And, any assets that you own in trust for (ITF) for someone else, avoid probate as well.

If you don't like the idea of having your beneficiaries' contact information along with what they received from your estate published at the courthouse for anyone and everyone to see, you'll want to avoid probate.

Like to save money and time...and make things easier for your loved ones? Then, you'll likely want to avoid probate.

Ancillary Probate

You probably know what probate is - it's the judicial process for transferring property from your name to the names of your heirs at the time of your death. Probate, as we normally think of it, applies to property located in your state of residence. But what if you also own property in one or more other states when you pass away?

Unless you've done some estate planning that lets you avoid it, your out-of-state property may be subject to a process known as Ancillary Probate. Under Ancillary Probate, real estate and certain personal property that's located out-of-state may need to go through the probate process in the state where it's located before it can be passed on. This presents two potential complications for your loved ones at the time of your death.

Time and Expense

One or more additional probate processes means additional court costs and attorney's fees, not to mention the amount of time that your out-of-state property may be tied up and inaccessible by your family members. Plus, your loved ones might need to travel back and forth to facilitate the Ancillary Probate process, which will likely only add to the expense and stress already associated with settling a probate estate.

Multiple Sets of Heirs

If you pass away without a Will, then you'll have what's called an "intestate estate." This means that the laws of each state where you have probate property will determine who inherits that property. And intestacy laws can vary from state to state. The result? You could end up with different sets of heirs for different items of property, depending on where that property is located.

Fortunately, with a little advance planning, you can avoid Ancillary Probate. Your estate planning attorney can help you put a Living Trust in place that will help all your property avoid probate, regardless of where it's located.

Individuals whose estates are valued below $100,000 might be able to avoid probate by establishing payable on death and transfer on death beneficiaries. Payable on death is frequently used with personal and business bank accounts. Transfer on death beneficiaries can be assigned to life insurance policies, retirement accounts, and financial portfolios.

All that is required to establish POD or TOD beneficiaries is to fill out a form provided by the financial institution or broker where funds are held. Account holders can designate as many beneficiaries as they need, along with assigning a percentage of funds to be distributed to each beneficiary.

For example, an individual has a spouse and three children and wants to equally divide funds from checking, savings, and financial portfolio. She would fill out beneficiary forms to include beneficiary names, address and social security number.

Beneficiaries do not have access to funds until death occurs. Upon death, financial institutions must provide date of death values which are submitted to the county tax assessor office. As long as decedents' do not owe back taxes, inheritance money can be distributed as soon as the tax assessor signs off on the tax form. If outstanding taxes are owed, the decedent's estate must submit payment before funds can be distributed.

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