Probate is commonly considered to be a burden on the family of the deceased. While the probate process can be complex, expensive, and stressful, the good news is that not all of a person’s assets and property must go through probate. There are ways to ensure certain assets avoid the probate process upon death.
The probate process requires an inventory of the deceased’s assets and debts. The estate must use the assets to pay off the debts. After that, any asset that does not already have a beneficiary designated must go through the court’s probate process before it can be distributed to the heirs or devisees.
Any asset being distributed via the probate process is considered probate property. This can apply to both real and personal properties. This does not mean, however, that each of Grandma’s individual porcelain figurines will go through probate. Most states have laws and dollar limits on what qualifies a property or asset to go through probate. Think big-ticket items, like the following assets:
- Real property (homes, vacant land)
- Bank Accounts
Exception: if the above assets are held jointly, for example with a spouse, then often that property passes directly to the spouse, no probate needed.
Primarily, any property that was owned solely in the name of the deceased will pass through probate. However, with the right planning, even those assets can avoid probate.
- Account Beneficiary Designations: Many financial institutions, life insurance policies, and retirement accounts allow the owner to designate beneficiaries of the account while they are still alive. After the owner’s death, the account passes directly to the designated beneficiary and avoids probate.
- Real Property Deeds: Many states allow for beneficiary deeds or transfer-on-death deeds. This allows an owner of real property to execute a deed that names a beneficiary who will obtain title to the property at the owner’s death without going through probate. The deed gets recorded while the owner is still alive in the county where the real property is located.
- Title Assets with Rights of Survivorship: Assets that are owned jointly with right of survivorship will pass directly to the surviving owner and avoid probate. This is a common way for married couples to hold title to real property and bank accounts.
- Set Up a Living Trust: A living trust is an entity created during your lifetime to hold assets for the purpose of distributing them after your death. Unlike a will, living trusts are not usually subject to the lengthy legal and often expensive probate process.
If a family member of yours has recently passed, or if you want to learn more about how your family can avoid probate upon your passing, consider meeting with a lawyer, like a probate lawyer, today. An experienced estate planning attorney can help guide you through the probate process, and help you learn how to avoid it in the future.