If you die with just a will or without even that basic estate planning document, your estate must go through probate. Probate is handled publicly through the applicable court, and the proceedings can be very expensive and lengthy.
There’s good news, however. In most cases, it’s easy to avoid probate. Below is a list of some common ways you can help your loved ones avoid this often time-consuming and costly process during estate administration.
Set up a Revocable Living Trust
One way to avoid probate of your estate is to set up a revocable living trust. Upon your death, the assets held by the trust pass directly to your named trust beneficiaries. This is different than a will, which simply distributes your property and assets to beneficiaries after you pass away but is subject to probate in that process.
Name Beneficiaries on Your Accounts
Another good practice is to establish transfer-on-death provisions for accounts such as bank and investment accounts and retirement plans like an IRA or 401k. Simply name your beneficiary, who would then receive the balance after you pass away. Other accounts could include life insurance policies, pension plans, or stocks and bonds.
Establish Joint Ownership of Property
You can also pass your real property directly to others by establishing joint ownership. You can accomplish this by changing the deed on real property to either a joint tenancy or a tenancy by the entirety. For example, if you and your significant other are thinking of purchasing a home, owning it jointly would allow it to pass to one individual without going through probate in the event something happens to the other.
If you anticipate the estate to be larger than the federal estate tax exclusion amount, which in 2016 was $5.45 million, it might be advisable to reduce the size of the estate by taking advantage of the $14,000 individual annual gift exclusion. Your attorney could discuss these details with you further.
The estate planning attorneys at TuckerAllen can discuss these options and other ways to avoid probate that make the most sense for your situation.