If you have done your will, then you have taken the first step in implementing a proper estate plan. But you may want to do more than just make your will, you may consider trying to avoid probate altogether. Avoiding probate can be helpful for those you leave behind, as it makes dividing up your assets much easier. This article will give you an overview on how exactly you can set up your estate plan to help avoid probate altogether.
You can avoid having your estate go into probate if you set up pay-on-death accounts, establishing a revocable living trust, or by giving someone joint ownership in property. Most states have regulations set up to allow individuals to avoid probate.
- Revocable Living Trust. A revocable living trust holds property and prevents it from becoming part of the probate estate. A trustee holds the property, and after the death of the owner, the trustee can transfer the property to the designated heirs. The heirs don't have to do anything with the probate court, as the property becomes theirs free and clear once you pass away. You can also establish joint ownership on a piece of property, where title is worded to imply that once you pass away, the ownership of the property is automatically transferred to the joint owner.
- Pay-on-Death Accounts. Converting bank and retirement accounts to payable-on-death accounts is a great way to transfer the money directly to the beneficiary upon the owner's death, which keeps the money out of the estate. Having joint ownership in these accounts is also beneficial to making sure the money in those accounts does not have to be run through probate.
- Gifting. Gifting property is another way you can avoid probate, which saves you money as well. As a general rule, the higher the value of the assets that go through probate, the higher the fees and costs are for going through the probate process. Of course, giving someone property while you are still alive means that you no longer own the property, so this is not an option for you if the the property is something you want to retain use and control of during your lifetime. But if there are assets you no longer need or want, but can be of some value, gifting them may be the right option for you. Another added plus is that most gifts are not subject to the federal gift tax, but you'll need to check with your accountant and estate attorney for more information.