If your assets go through probate when you die, the extent of your estate becomes common knowledge to anyone who cares to look – all he has to do is ask for a copy of your will at the courthouse because the document is a matter of public record. If you don’t leave a will, the court decides who gets your property. The court dictates what the executor of your will can and cannot do, and when she can do it. Costs and fees can be extensive. When faced with all that, it's no wonder many individuals plan their estates in such a way as to avoid this legal process to the greatest extent possible.
Check the beneficiary designations on your assets that provide for them. These usually include things like life insurance policies and retirement plans. If you've named your estate as beneficiary, these assets pass through probate. The same occurs if you name no beneficiary at all. If you name an individual, however, they avoid probate. They go directly to that individual according to the contract you made with the issuing institution.
Add payable-on-death provisions to any assets that allow for them, such as bank accounts and certificates of deposit. Unlike when you hold an account jointly with someone else, the individual you name on a payable-on-death account has no access to your money during your lifetime. The designation doesn't kick in until you die, then ownership of the account shifts automatically to the person you've named. Transfer-on-death designations work the same way to avoid probate, and they can apply to assets such as securities.
Title your real estate in such a way that it transfers to someone else automatically at your death. This commonly involves naming yourself and a co-owner as joint tenants with "rights of survivorship" in the deed. These rights ensure that your share of the property passes to the other owner when you die so probate is not required to facilitate the transfer or authorize a new deed. Some states allow you to hold title to other assets this way as well, such as vehicles.
Create a living trust. This involves establishing a legal entity – the trust – to hold ownership of your property. Because your trust owns your assets, not you, probate is not required to pass them to others even if they don't have beneficiary, payable-on-death or survivorship provisions. When you create your trust documents, you can state within them how you want your property distributed and to which beneficiaries. It's a process much like leaving a will, but without necessity of probate court involvement. The key to this method of estate planning is to make sure you transfer all your assets into the trust's ownership. If you omit any, and if you've made no other arrangements for them to pass directly to someone else, they'll be subject to the probate process.
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