Browse through the following to get an idea about probate and how it should be avoided:
What is probate?
After the demise of an individual, their property undergoes a legal procedure of being overseen by a probate court, which is known as probate. The probate includes:
- Identification and inventory of the property of the individual who passed away.
- Paying debts and taxes
- Getting the appraisal of the property done.
- Proving in court that the will of the person who passed away is invalid
- Distribution of the rest of the property according to the will or state law, in the absence of a will.
How should you avoid probate?
You would not want to give away a big chunk of your hard-earned property to the government as probate fees. You would not like it either if your spouse and children have to wait for a very long time to receive your property. Read the following points to understand how you can avoid probate:
Have a revocable living trust
A revocable living trust, a written agreement covers three phases of your life:
- When you are alive.
- In case you become mentally incapacitated.
- After your death.
After the trust agreement is signed, you should title your assets in your trust’s name or take the help of good probate lawyer. The assets owned by the trust will avoid probate only after your revocable living trust becomes the owner of your assets. If any of your property is not included in your trust at the time of your death, that will need to be probated unless that has a designated beneficiary or is owned by your survivor with rights of survivorship.
Giving away as gifts
Your property would not go through probate if you are not its owner during your death. That is the reason why you can give your assets away as gifts while you are still alive. It will also bring down the probate cost, because the higher the financial value of the assets, the more is the expenditure on probate.
Make your bank accounts payable on death accounts
Convert your bank accounts to payable on death accounts to avoid probate. Fill out a form and list a beneficiary. Your assets will directly go to your beneficiary after your death without going through probate.
Go for joint ownership of property
Joint ownership of property can allow you to avoid probate when one owner dies. In order to avoid probate, take title with someone else to show that you have joint ownership of the property with the other person. After your demise, your property will go to your joint owner without going through probate. To avoid probate you can own property as follows:
- Joint tenancy with right of survivorship
- Community property with right of survivorship
- Tenancy by the entirety
Small estates have simplified processes
There are shortcuts available to avoid probate in almost every state. In fact there are ways to absolutely go around it. Each state defines the term in its own way.