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How to Avoid Probate When Estate Planning

4 min read

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By Thomas Rosen

Protect your beneficiaries from the expense and hassle of probate with good estate planning. Learn about some common and legal options for avoiding probate.

It’s possible to legally avoid probate in many cases. Depending on what type of assets you want to keep out of probate and who you want to pass them onto, the process for this can differ. Check out some common ways to avoid probate below.

Note: Each state has its own probate laws. If you’re considering a trust or other official estate documents, it might be a good idea to consult an attorney who has experience with probate laws in your state.


Common Ways to Keep Things Out of Probate

You don’t always need legal documents to avoid probate. With certain assets, it simply requires planning ahead and filling out a bit of paperwork with your provider. Other issues may be more complex and require filing documents with your clerk of court, and it’s these items that may require the assistance of a lawyer.

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Opt for Transfer on Death Accounts

This is an option that doesn’t require a lawyer and may be one of the easiest ways to ensure your assets go to the right beneficiary upon your death. It’s typically an option for financial accounts that hold same-as-cash assets.

This option requires an election with your financial provider. Contact your broker, bank or other financial institution and let them know you want to name one or more beneficiaries for your account.

Typically, you’ll need to complete paperwork to do this. It’s usually relatively simple and mostly involves identifying your accounts via account numbers and listing your beneficiaries. You may need to include some specific information about beneficiaries, including addresses, phone numbers and Social Security numbers, but this varies from institution to institution.

You don’t need a lawyer to complete this type of planning. Your bank should be able to walk you through the whole process.

However, if you’re engaging in estate planning with an attorney and creating a will or other documents, you may want to inform the attorney about any transfer on death accounts.

You can also elect to transfer ownership of some real property upon death in certain states. Below is a list of many assets that might be transferable upon death in certain states — always check your state laws.

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Use a Revocable Living Trust

This one does typically require the intervention of an estate planning lawyer. A trust is a legal vehicle that holds various assets. When you place assets within a trust, you’re no longer the owner. The trustee becomes the owner and manager of the assets, and that trustee disburses the assets to beneficiaries as deemed by the legal document creating the trust.

For example, you can create a trust that says a beneficiary can draw assets from it only for the purpose of paying for a college education. You can also create a trust that pays out to certain beneficiaries when they reach legal age or take some sort of action, such as getting married.

Trusts are a great way to ensure that your legacy is used according to your wishes. There are two main types of trusts: irrevocable and revocable.

Invest in Joint Ownership

Another easy way to avoid probate in many cases is to simply ensure you’re not the only owner for assets or a piece of property. This can apply both to actual property, such as cars and homes, or to financial accounts such as checking or savings accounts.

In most states, if two people own something and one person passes away, the ownership of the item automatically transfers solely to the other person. So, for example, if a married couple owns a house together, the house becomes one person’s property if his or her spouse passes away. If a sister and brother open a joint checking account together and he passes away, she typically becomes the owner of the account and the assets inside.

In some circumstances, estate law may come into play or a will can change some of this. For example, if two people own a business together as partners, it’s possible that someone might will their half of the business to a beneficiary. This is where things can get complex, though, so if you’re interested in doing something like this, make sure you consult with an attorney.

Give Gifts During Your Life

You can gift beneficiaries with assets during your life to avoid those items going through probate later. For example, if you know that you want one of your children to have the family home, you might transfer the ownership to them earlier.

When you’re giving gifts, whether it’s real property or cash, make sure you understand potential tax implications. You can give assets worth up to $15,000 annually as of 2020 without worrying about a gift tax. If you’re planning to give more than that, you might want to consult a tax attorney or accountant.

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What Doesn’t Help You Avoid Probate?

Many people believe having a will keeps things out of probate. That’s not true. A will simply states your wishes for how the estate is distributed via probate. In the absence of a will, state laws decide how the assets are divided among beneficiaries.

So, while you do need a will, this might not be the only thing you need to plan for. Early estate planning helps you ensure your assets are handled according to your wishes and can take some of the burden of probate off your loved ones in the future.

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Thomas Rosen



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