In most cases, probate is easy to avoid, and yet many people fail to do so. We would all love to pass on a little something to our children or other loved ones. We save and save to make life a little easier for the people we care about. The last thing anyone wants is to give a large portion of their hard-earned money to the government in the form of probate fees. Nor do we want our loved ones, especially our spouses and children to wait months, even years to receive what is due to them.
Avoiding the delays and costs of probate is much easier than you think. Here are some basic tips to keep more of your estate in the hands of the people who matter most.
1. Write a Revocable Living Trust
The most straightforward way to avoid probate is simply to create a living trust. Making a trust is not all that complicated to accomplish, and you can rest assured knowing that your estate and your beneficiaries will not be burdened by a court-supervised probate process after your death.
A revocable trust is created by writing a trust agreement. The agreement involves three primary parties: the trust-maker, the trustee and the beneficiary. As the names imply, the trust maker is the individual who makes and funds the trust. The beneficiary is the person who benefits from the trust. The trustee manages the trust and its property.
The trust maker will not own property in his individual name after his assets have been funded into the name of the trust. Technically, they will be owned by the trustee for the benefit of the beneficiary—himself—or later beneficiaries. Because he doesn’t personally own this property, probate is not required to transfer ownership to other individuals when he dies. His trust does not die with him but lives on as a separate legal entity.
2. Name Beneficiaries on your Retirement and Bank Accounts
For some, a Last Will is often a better fit than a trust because it is a more straightforward estate planning document. Yet, just because you have written a will does not mean that all of your assets have to pass through probate. What most people do not realize is that many of our most valued assets allow us to name beneficiaries.
Many people do not take the time to actually name a beneficiary or beneficiaries for their bank accounts, investments and retirement plans. Payable on death accounts include life insurance policies, pension plans, 401K plans, IRA accounts, stocks and bonds.
All you need to do to get yourself started is to request and fill out the payable on death forms that your brokerage company or bank can provide. Remember, if you are married, some of these accounts automatically may be partially owned by your spouse. By taking the time to fill out these forms, however, you ensure that the proceeds are immediately dispersed at death without having to pass through probate – sparing a lot of time and a lot of expense.
3. Joint Tenancy with a Right of Survivorship
Another great way to keep your real estate out of probate is to consider holding your property jointly. Joint tenants with right of survivorship (JTWROS) is a type of brokerage account owned by at least two people, where all tenants have an equal right to the account’s assets and are afforded survivorship rights in the event of the death of another account holder. The concept also applies to real estate property.
In this type of property ownership, a surviving member will inherit the total value of the other member’s share of property upon the death of that other member. With regards to a brokerage account of this type, all members of the account are afforded the power to conduct investment transactions within the account as well.
The Bottom Line on Avoiding Probate
As you can see, there are only a limited number of ways to avoid probate. What will actually work for you will depend on your own unique family and financial situations. The bottom line is that by using one or more of the techniques described above to avoid the probate of your property, you will be creating peace of mind for you as well as peace of mind for your loved ones during a difficult time.
Do I Need an Attorney for Help with Probate Issues?
A skilled and knowledgeable probate attorney will make the probate process easier and run much more smoothly. Timing is incredibly important, and state laws vary widely. A probate attorney can help you understand your state’s laws, and will ensure all deadlines are met. Intestate estates and contested wills could especially benefit from the assistance of an experienced probate attorney.
If you would like some guidance as you go through the process, a probate lawyer can help. To schedule a meeting with an attorney from Olson Probate, please call 714-847-2500.