Five Ways to Avoid Probate
Even when you assets are accounted for in a will, the will has to pass through probate before the beneficiaries take ownership. Generally, anything in the will remains private and any assets not named in the will become part of public record once the probate judge makes a determination of beneficiary.
If you want your beneficiaries to immediately take possession of your assets upon your death, there are five primary ways to avoid probate. However, even if you use one of the main methods of avoiding probate court, you should have an estate attorney review your entire estate. As with any legal process, there are variations by state and caveats that could unhinge your intentions.
Trusts: Trusts are fantastic tools for creating multi-generational asset management. But trusts have to be properly created by a good estate attorney.
Jointly Held Property: There are several ways to name property owners on a deed, and if you do it the right way, the property won’t go through probate when the first owner passes. But your lawyer might encourage you to create a trust and avoid this question altogether.
Insurance Death Benefits: Insurance benefits never really belonged to you anyway. The benefit immediately goes to the beneficiary and is often not taxable.
Pay-On-Death Account: This tool is especially helpful for smaller amounts of money held in a checking account. This money is a great way to continue paying debts and making funeral arrangements.
Retirement Accounts with Beneficiary: There is a generation of people who have always had 401(k) retirement plans. So unlike the older generation that benefited from pension accounts, the younger workers will have more money to pass along to heirs.
And technically, almost anything you give away before you die won’t go through probate. But again, this can be a legal nightmare thanks to limitations on gifts. Consult with your estate planner on how to give away property prior to death.