Probate is required for certain assets in your estate when you pass away. Probate can be a long, complex, and expensive process, so many people want to do whatever they can to avoid having their estate go through probate when they pass away. Sometimes, you can’t avoid probate, like if you die without a will. However, with a few estate planning tools, you can avoid having your estate go through probate when you pass away. Here are some of the most common ways to avoid probate.
Create a Revocable Living Trust
With this type of trust, assets automatically transfer from the owner to the beneficiary upon death, using a trustee to help distribute the assets to beneficiaries. You can put many types of assets in a trust, such as stocks, bonds, bank accounts, safe deposit boxes, and funds for funeral expenses. Revocable trusts can be changed or modified during your lifetime. Any asset placed in the trust won’t need to go through probate.
Make Beneficiary Designations
Making beneficiary designations is the process of listing successors or heirs on accounts that allow it, such as bank accounts, IRAs, savings bonds, life insurance policies, and 401(k)s. Assets that have beneficiary designations don’t need to go through probate. When you pass away, the ownership of your assets is transferred to the named successor. Such assets usually have “payable on death” or “transfer on death” designation. Beneficiary designations take precedence over a will, so if you have one person listed as a beneficiary on the account but give the asset to a different person in your will, the asset will go to the person on the account.
Jointly Own Assets with Rights of Survivorship
If you own assets jointly with another person with a “rights of survivorship” clause, those assets don’t go through probate. One example is a vacation home where two people are named on the deed. In this case, the second person on the deed will be entitled to the asset if they are still living. Marital assets, such as homes and joint bank accounts, often fall into this category.
Create an Enhanced or “Lady Bird” Deed
Lady Bird Deeds, also known as Enhanced Life Estate Deeds or Transfer on Death Deeds, allow property owners to transfer ownership to a beneficiary after they pass away. This transfer of ownership happens automatically, without the need for probate. While the property owner is still alive, they retain full ownership responsibilities. They can sell, mortgage, or maintain the property as they see fit. Having a Lady Bird Deed is one of the most efficient ways to transfer property ownership without selling a large asset or refinancing a home.
Give a Financial Gift
Gifts can be an effective way to avoid probate. When you gift assets to a family member, individual, or organization, they are removed entirely from your estate and will not be subject to probate. Keep in mind that if you gift over $18,000 in a single year, you will be required to pay a Gift Tax.
Estate Planning to Avoid Probate with Kathy D. Sheive
Estate Planning attorney Kathy D. Sheive helps residents throughout Orange and Osceola counties create comprehensive estate plans that enable you to distribute your possessions and assets while avoiding probate. Contact us today at 407-315-2268 for a low-cost consultation.