Provide 3 ways to avoid probate

Provide 3 ways to avoid probate

Preparation and funding of a Living Trust

A living trust is an essential estate document. And preparing this document would ensure you avoid probate. Quite similar to the last Will, but the living trust can be used to transfer assets to desire beneficiaries both while you are alive and death. It is also used to name a trustee or any desired individual to oversee your estate and make financial decisions on your behalf when you may be incapable of making such decisions. These can all be implemented without probate.

But signing the revocable living trust agreement by itself is not enough to avoid the probate of your property after you die. Instead, once the trust agreement is signed, you will need to take your assets and title them in the name of your trust. Only after your revocable living trust has become the record owner of your assets instead of you–will the assets avoid probate.

This is called funding the trust, once the living trust is written and asset transferred to the trust, the trust maker doesn’t own these assets anymore. They would only be managed by the trustee for the beneficiaries.

The trust maker will not own property in his individual name after his assets have been funded into the name of the trust. Because he doesn’t own this property anymore, probate is not required to transfer ownership to other individuals when he dies.

Assets that be places into the living trust include:

It is not always an easy thing creating a living trust, as a living trust attorney will better explain to you. The following are a list of potential assets which you must have to transfer to your living trust:

Real estate

To transfer a house or other real estate property to a living trust, a new deed must be made with the local real estate records; certain tax transfer forms will have to be filed along with the deed. It’s good you consult a living trust attorney before delving into these waters.

Mortgages

If the house or apartment being transferred is subject to a mortgage, then the mortgage bank must be notified to obtain its approval. If not, then the full mortgage must be paid since the transfer was unauthorized.

Bank and brokerage accounts

Banks and brokerage companies all have their forms and requirements for transferring accounts into trusts. These requirements or rules must be properly investigated before completing the transfer.

Apart from documenting your Will, you should considered a revocable trust to ensure you are and properties are adequately secured.

Obtaining a Joint tenancy with a right of survivorship

Here’s another way to prevent probate during implementation of estate plans. This involves owning a property jointly with another individual, and as such, when the assets is required to be transferred to either of the joint owner, it is dine without probate. For example, if you own a home or another to buy a home, owning jointly would allow the property pass automatically to your significant other without having to go through probate. It doesn’t matter if you are married or not. If the property is designated a jointly held property it is going to go to the surviving member of the couple.

Adding a joint owner to a bank account, investment account, or to the deed for real estate will also avoid probate, provided that it is clear that the account is owned as joint tenants with rights of survivorship and not as tenants in common. In certain states you and your spouse can own property with rights of survivorship in the form of tenancy by the entirety. This is only available for married couples.

Having a named beneficiary on bank, investment and retirement accounts

Thought it may seem simple enough, many people don’t 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.

If you own assets held in a retirement account such as an IRA, 401(k), and have named beneficiary, then you are already taking advantage of probate avoidance through the use of beneficiary designations.

Here are simple ways to ensure you avoid probate all together. It is however important that you consult a probate lawyer to help put you through the proper process of making estate plans and ensuring you avoid probate.

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