The probate process can be long and costly, taking months and sometimes years to resolve. The longer it takes, the more it will cost, leaving potential heirs with less than the deceased may have intended. This is really why many people engage in estate planning. But for these and other reasons, most people will try to avoid probate in any way possible.
Transferring assets outside of the probate process can not only save the estate a lot of time and expense, but can also help loved ones avoid years of legal hassle. There are four general ways to pass on your property and avoid the probate system:
Joint Property Ownership to Avoid Probate
Jointly owned property with the “right of survivorship” avoids the probate process for one very simple reason: upon death, the deceased joint owner no longer owns the property and it passes to the living joint owner. There are several ways to do this, and the chosen method will depend on what a particular state recognizes.
To create any of these forms of joint ownership with a right of survivorship, states typically require a written document that sets out the joint ownership relationship, the property that is jointly held, and the right of survivorship. Here are the most common forms of joint property with a right of survivorship:
Have Death Beneficiaries
Many types of financial assets and instruments allow you to designate a beneficiary upon your death. Upon your death, these assets become the property of whomever you designate as the beneficiary, are no longer a part of your estate, and thus avoid probate entirely. Here are some of the most common financial assets that allow you to do this:
Revocable Living Trusts Avoid Probate
A revocable living trust occurs when you transfer property to someone else (the trustee) to hold it for your benefit, but you reserve the right to revoke the trust. This means that the trustee actually owns the property, but must use it for your benefit under the terms and conditions of the trust.
By giving ownership of the property to the trustee, the property is no longer a part of your estate and can avoid the probate process entirely. You can instruct the trustee that, upon your death, he or she should transfer the property to your family and friends. This effectively transfers property without going through probate.
Trusts are set up in formal documents, much like a will, so make sure that you are complying with your state’s requirements for a trust when setting one up.
Gifting to Avoid Probate
Finally, one of the most obvious but often overlooked ways to avoid probate is to simply give your property away before your death. This requires a certain amount of planning and forethought, and even the best plans may be thwarted by unseen circumstances. As a result, you should generally only consider using gifts to avoid probate on smaller, less valuable assets. Also be aware that gift taxes apply if the gift is in excess of a certain amount, so this is typically a good option only if the asset is below the gift tax threshold.
Free Consultation with an Estate Planning Lawyer
If you are here, you probably have an estate planning or probate matter you need help with, call Ascent Law for your free consultation (801) 676-5506. We want to help you.
Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
Practiced in the art of working with junk food in Africa. Enthusiastic about developing action figures in Naples, FL.