The process of probate can be a lengthy and costly legal procedure that can tie up assets and delay the distribution of an estate to beneficiaries. While it is sometimes a necessary inconvenience, you may not want to have your estate go through probate due to privacy concerns, the desire for a more efficient transfer of assets to your heirs or to minimize the potential for family disputes over inheritance.
There are several ways you can proactively plan your estate to avoid probate and to better ensure a smooth transfer of assets directly to your beneficiaries.
Joint ownership
Joint ownership is one effective way of avoiding probate and facilitating the direct transfer of assets. By holding property jointly with rights of survivorship such as joint tenancy with right of survivorship or tenancy by the entirety for married couples, ownership automatically passes to the surviving joint owner(s) upon the death of one owner.
Payable-on-death-accounts
These are accounts that allow you to designate beneficiaries who will receive the funds directly upon your death without the need for probate. Common types of payable-on-death (POD) accounts include bank accounts, certificates of deposit (CDs) and brokerage accounts.
Establish a living trust
A living trust allows you to transfer ownership of assets into the trust during your lifetime, with detailed instructions on how those assets should be managed and distributed after your death. When you place assets in a revocable living trust, you retain control over them while alive but upon your death or incapacitation, the trust assets can pass directly to the beneficiaries named in the trust document, bypassing probate.
Gifting assets
You can also proactively transfer assets during your lifetime through gifting. By gifting assets to your intended beneficiaries before your death, you can reduce the size of your estate subject to probate. This can be particularly useful for assets with sentimental value or those you anticipate causing disputes among heirs.
Regardless of which option or options sound intriguing, you should strongly consider getting legal guidance to help ensure that the estate planning strategies you choose align with your specific circumstances and goals, and that they comply with relevant laws and regulations.
