Probate is a legal process that aims to authenticate a deceased person’s will, resolve outstanding debts and distribute their assets. Depending on the specifics of each case, the process may be time-consuming, costly and subject to court oversight.
Therefore, individuals often seek ways to avoid probate to ease the transfer of assets to beneficiaries, maintain privacy and potentially reduce expenses associated with the probate process.
Strategies for avoiding probate
If you are in the process of estate planning and looking for strategies to avoid probate, several options are available:
- Establishing a living trust: Creating a revocable living trust enables you to transfer ownership of assets to the trust during your lifetime. This helps ensure that these assets are not subject to probate upon your death. You retain control over the trust and can modify or revoke it as needed during your lifetime.
- Beneficiaries designation: You can designate beneficiaries for various assets, such as retirement accounts (e.g., IRAs, 401(k)s) and life insurance policies. By naming beneficiaries, these assets can pass directly to them upon your death, avoiding probate. It’s important to keep beneficiary designations up to date to help ensure your assets are distributed according to your wishes.
- Joint ownership with rights of survivorship: Jointly owning property or financial accounts jointly with another individual with rights of survivorship means that the surviving joint owner automatically inherits the assets upon your death. This arrangement bypasses probate and facilitates the easy transfer of ownership to the surviving owner.
- Payable-on-death (POD) or transfer-on-death (TOD) accounts: You can designate beneficiaries for bank accounts and brokerage accounts using POD or TOD designations. Upon your death, the funds remaining in these accounts go directly to the named beneficiaries, avoiding probate.
It’s important to seek legal guidance to create an estate plan suited to your needs and objectives.
