Probate is the court-supervised legal process of settling a person’s estate after their death. This includes the appointment of someone, the executor, to pay all the debts of the estate and transfer the property of the deceased to his or her heirs. It can be a lengthy and expensive process. There are filing fees and attorney fees. There are court appearances and sometimes it takes a significant amount of time for all of the estate property to be transferred to the beneficiaries. In addition to being time-consuming and financially draining, probate opens up the deceased person’s finances for public records. The nature and value of the estate assets will be entered into the public record as will the individual’s debts and who will be receiving the assets of the estate. There are several techniques, however, that you can use in the estate planning process that will substantially reduce if not eliminate the amount of property that must pass through probate.
How Do You Avoid Probate?
There are several tools and techniques you may apply to avoid the probating of your assets after you pass away. One popular way is to create a revocable living trust. To create a revocable living trust, you must execute a document that will create the living trust as an entity separate from you. You must then transfer property ownership from you to the trust. You then become the trustee so that you have full control of your property while you are alive. Upon death, a person you named as your successor trustee will distribute the trust assets according to the terms outlined in the trust document. This transfer of assets from the trust to the beneficiaries does not go through probate.
You may also want to make your bank and other financial accounts payable on death. All you will need to do is fill out a form that designates a beneficiary who will be the beneficiary of the account. Upon your death, the money in the account will transfer directly to the listed beneficiary. You may also do this with security registrations. The transfer to the listed beneficiary will happen immediately upon your death. There is no need to wait for probate proceedings.
Several types of property that are jointly held also avoid probate. This includes joint tenancy with right of survivorship. The property will automatically pass to the surviving owner when one owner dies. Usually, this happens without the need for any additional documents.
Another option to avoid the probate process is to make inter vivos gifts. This means that you give away your property while you are still alive. If you know you want a certain person to inherit a particular asset, you may want to consider giving it to them as a gift while you are still living. This means that the asset would not be tied up in probate.
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