How to Avoid Probate
Probate is an expensive and long court proceeding in which a will is reviewed, made public and determined to be valid or invalid. While probate should ideally last no longer than four to six months, realistically some wills take as long as two to three years to probate. With so many disadvantages to the traditional court system, it is no wonder that many people seek ways to avoid the probate system entirely. The following are some of those ways.
One means of avoiding probate is to ensure that all of your bank accounts are transferred to someone else at your time of death. Pay-on-death accounts are accounts created by banks with a contractual clause that specifies who the account is given to at the time of your death. The document is typically signed, dated and notarized to make it official. The funds are then given to the specified recipient once the bank is presented with a valid certificate of death. If you think that this option sounds useful, you should also create an account instruction document detailing who each account has been left to so that the person can collect the money.
Joint Ownership of Property
Joint ownership refers to property owned by two or more people in equal shares. In order to make the property transferable at your time of death, you will need to specify that the property has a right of survivorship. This means that the last owner alive receives the full property. Joint ownership is established in the property’s deed and must be filed with the county office where the property is located. Some states may require a third-person (or "straw man") intermediary when you are changing the deed. To find out more about joint ownership property as a possibility of avoiding probate, contact an estate planning attorney.
Gifts & Bill Payments
Gifts are not only useful for removing property from your estate to help you avoid probate, but gifting properly will also help you avoid estate taxes. According to current IRS law, an individual can gift up to $14,000 per recipient in one calendar year. Married couples can double this giving, totaling $28,000 in a calendar year. Simply put, if you have three grandchildren attending college and you wish to help them with their tuition, you can give each individual child $14,000, or $28,000 as a couple, each calendar year, and the funds are gift-tax free.
In addition, you can also give unlimited amounts to pay for someone’s medical bills. So, if you have a loved one who is suffering from cancer, you can offer to pay for their entire treatment. As long as the funds go directly to the doctors or medical institution, it is gift-tax free. Even better, you’ve become a family hero by aiding a sick loved one.
Another, often more reliable option for avoiding probate is a living trust. A living trust is created while you are alive. It allows you to pour all of your assets into a legally created entity and therefor remove them from your possession. This technique is especially useful if you have specific wishes as to distributions of funds after you die. To ensure that any assets remaining outside of the trust still avoid probate, you can create a pourover will that places everything into the trust at your time of death.
See an Attorney
Avoiding probate is possible with the right tools. If you would like to prepare your estate in a way that avoids probate, contact an estate planning attorney for a consultation. An estate planning attorney will be apprised of your state’s particular laws and procedures and can advise you about the most efficient and reliable ways to protect your assets from probate.