For many people the prospect of going through probate can be overwhelming. Probate is a mandated process that takes place after a person has died in order to settle their estate and make sure that it is conferred upon the rightful beneficiaries. Probate sounds straightforward enough, but nevertheless, it can become a complicated process that can take up a lot of time and money. Here we’ll explore different options for bypassing probate while still ensuring that your estate is distributed according to your wishes.
A trust is a legal document that allows you to transfer your assets or properties to a trustee who will manage them for any beneficiaries you may appoint. There are different types of trusts available, however, for the purpose of avoiding probate court, a living trust is a sound option. A living trust is similar to a will but provides two major advantages that a will doesn’t. First, while a will doesn’t take effect until your death, a living trust takes effect as soon as it is executed. Second, a will is required to go through probate whereas a living trust allows you to skip probate and expedite the process of distributing your estate. By transferring your assets and properties to a living trust, they are then secured from probate by the terms of that trust. Almost any asset you own can be protected from probate by a living trust—vehicles, real estate properties, finances, etc. It is recommended that you do in fact place as many assets as possible within a trust in order avoid having them submitted to a probate court.
A joint ownership is another way to bypass probate proceedings. In essence, joint ownership means that a property is owned by more than one person or entity. Typically there are two categories for joint ownership. One is called tenancy by the entirety. This type of joint ownership is reserved for couples who are legally married and is usually only applicable to real estate properties that a couple has purchased together. As the name suggest, tenancy by the entirety means that both spouses have full ownership of a property. In the event that one spouse passes away, the property is granted by default to the remaining spouse and therefore does not need to be submitted for probate. The second type of joint ownership that can be used to skip over probate is joint tenancy. Joint tenancy is similar to tenancy by entirety in that the property is automatically passed on to the surviving owners in the event of another owner’s death. However being married is not a requirement, and joint tenancy can apply to financial accounts, vehicles, and any other valuable assets two people acquire together. With both types of joint ownerships, probate is not required in order to transfer the property to the surviving owner as it is already under their name.
A beneficiary is an individual or entity who receives money, property, or other assets through a benefactor, usually after their death. For the most part, assets that are to be conferred upon a beneficiary can be transferred as soon as the death of the benefactor is legally documented. As such, it is not necessary for these assets to be probated. When compared to drafting estate documents, the appointment of beneficiaries is a much more affordable and direct way of protecting your assets. There are several assets that allow you to assign a beneficiary to them. Some of these include bank accounts, retirement plans, life insurance policies, 401(k)s, IRAs, stocks, and bonds. The types of accounts and assets that permit designated beneficiaries can vary across different states. New York, for example, does not permit this for real estate or vehicles. However, appointing a beneficiary for one of the aforementioned assets will render probate unnecessary as they will pass directly to the named beneficiary. An important point to keep in mind is that quite often many of these accounts or assets automatically designate a spouse as the beneficiary. Whether you wish for you wish for your spouse to remain a beneficiary or not, make sure to look into each account and update the beneficiary on file accordingly.
There are different options available to you if you are seeking to avoid submitting your assets and properties to probate court. Whether you choose to establish a living trust, joint ownership, or decide to appoint a beneficiary to your assets, each one of these options offers unique advantages to you in working towards avoiding probate. To learn more about these methods and get a professional opinion as to which one would work best for you, get in touch with a qualified probate attorney.