Probate is the legal process of administering a deceased person’s estate, which can be a long, complicated and expensive process. For many individuals, the thought of an estate going through probate is a daunting prospect. However, with careful planning and preparation, it is possible to avoid probate and ensure that your assets are distributed according to your wishes. This blog will explore seven things you can do to avoid probate.
- Create a Living Trust
A living trust is a legal arrangement that allows you to transfer your assets into a trust while you are still alive. This allows your assets to bypass probate and be distributed according to your wishes, without the need for court intervention. A living trust can also help to protect your assets from creditors and reduce estate taxes. Discuss your options with a probate attorney.
- Use a Payable on Death Account
A payable on death account is a type of bank account that allows you to name a beneficiary who will receive the funds in the account after your death. The funds in a POD account bypass probate and are distributed directly to the beneficiary, avoiding the time and expense of the probate process.
- Make Use of Joint Tenancy
Joint tenancy is a legal arrangement where two or more individuals own property together, with each owner having an equal share. When one owner dies, their share of the property passes directly to the surviving owner, bypassing probate. This can be an effective way to avoid probate for real estate, bank accounts and other assets.
- Give Gifts During Your Lifetime
Giving gifts during your lifetime is a great way to transfer assets outside of probate. By giving gifts, you can reduce the size of your estate and ensure that your assets are distributed according to your wishes, without the need for court intervention. The major benefit to this choice is that the benefactor is alive to experience the joy that his or her gifts bring others. There are limits to the amount of gifts you can give each year without incurring gift tax, so it is important to consult with a financial advisor or attorney before making any large gifts.
- Make Use of Beneficiary Designations
Many financial assets such as life insurance policies, retirement accounts and annuities allow you to name a beneficiary who will receive the assets after your death. These assets typically bypass probate and are distributed directly to the beneficiary, avoiding the time and expense of the probate process.
- Create a Will
While a will cannot guarantee that your assets will avoid probate, it is an important document that allows you to specify how you want your assets to be distributed after your death. A will can also name an executor who will be responsible for administering your estate and ensure that your wishes are carried out. A will is one of the most common instruments for asset distribution.
- Consider Estate Planning
Estate planning is the process of creating a comprehensive plan for the management and distribution of your assets after your death. An estate plan can include a living trust, a will and other legal documents, and can help to ensure that your assets are distributed according to your wishes, minimize estate taxes and avoid probate.
Avoiding probate can be a challenge, but with careful planning and preparation it is possible. Whether you choose to create a living trust, make use of joint tenancy, give gifts during your lifetime or use estate planning, taking steps to avoid probate can help to ensure that your assets are distributed according to your wishes and that your loved ones are taken care of after your death.
