Posted on: 3 June 2016
For many people, part of the estate planning process is finding ways to avoid probate. Probate can delay the distribution of your assets to your heirs for several months. If you are interested in probate avoidance, here are some methods you and your attorney can explore.
Establish Joint Property Ownership
One method of avoiding probate is to establish joint property ownership of your real estate holdings. When an heir is added to the deed for the property, he or she takes sole ownership of the property when you pass away.
Whether or not this is the best method for your property depends largely on the state in which you live and your marital status. For instance, if you live in a community property state, your spouse would have a right to claim full ownership of the property. If you wanted to leave the property to someone other than your spouse, you should probably explore another method of probate avoidance.
Use a Payable-on-Death Account
Some assets, such as your life insurance and bank accounts, offer the option of designating a beneficiary to receive the balances of the accounts when you die. The financial institution holding the account pays the funds directly to the person and not the estate. As a result, the funds do not have to go through the probate court.
If you opt for a payable-on-death account, you also need to select a secondary beneficiary in the event that primary beneficiary is not able to receive the funds from the account.
Create a Living Trust
A living trust is one of the most commonly used means of avoiding probate. When you set up a living trust, the assets you plan to leave to your heirs are transferred to the trust. The trust then has ownership of them.
After you die, the trust can then distribute the assets to your heirs without waiting. The assets are not subject to being reviewed by the probate court because they are owned by the trust. If you do opt to use the trust, it is important to note that the trust is still taxed. The federal government views the trust as part of your estate and as such, your trustee will have to ensure that the taxes on the assets are taken care of before closing out the estate.
There are many other methods that you and your attorney can explore. Your estate planning attorney can help you decide which is best for you and complete the necessary documentation to finalize your plans.Share