What is probate? In simple translation, probate means; a judicial process where a will is reviewed and proved to the court. The will states that the heir/heirs are entitled to oversee the estate and the specified assets. An heir is a person who is chosen by the decedent to manage the assets post his/her death. The will defines instructions on how it can be administered.
Why avoid probate? More of a bane less of a boon. Probate can be an expensive and lengthy process for you and the successors (heirs) both. It can end up lasting for months or even years in the worst-case scenario. The process involves a lawyer and a probate attorney, which means additional costs like hiring fees. In such an instance, you would want to end up eluding probate and carry on with the passing or distributing of the assets to the heirs.
We comprehend you work hard to earn a single penny, and you wouldn’t want to let a big chunk of it flow to the government in the name of probate. You must have proper planning on how probate can be avoided, under what circumstances. There are multiple situations where you can let go probate, and in some, it is a must. If you’re a married couple and wish to set up a trust for your children, you will have to pass through probate. A couple who has joint assets may avoid probate as under further conditions the surviving spouse receives everything without going through any legal process. If you wish to stay away from the hassles of being stuck in probate, you can know how to avoid the probate process below.
Crafting a Living Trust (Revocable Trust)
Creating a living trust is the simplest way to avoid probate. A living trust is similar to a will that is created when an individual is alive. You will have to add a name (any relative, friend, or guardian) in the trust to take over as the trustee after your death, also known as successor trustee. Here, you will have to transfer ownership of your property to yourself as the trustee of the assets. Post registering the estate (or assets in this case), will be controlled by the trust. After your death, the successor trustee is entitled to transfer the assets to the trust heirs without any probate process.
Joint Ownership Transfers with Rights of Survivorship
If you’re a couple, joint ownership transfer with the rights of survivorship works well to avoid probate, as all the assets or estate is passed on to the surviving spouse. This particular law is recognized in two facets;
- Joint Tenancy
- Tenancy By The Entirety
The couples who own equal shares valuable possessions like homes, commercial sectors, businesses, and vehicles can transfer them to the surviving spouse without being stuck in the probate process.
Tenancy By The Entirety
Tenancy by the entirety is exclusively applied to real estate and strictly stands for married couples. The particular category is beneficial to guard your estate against creditors in case of catastrophes.
Registering Transfer-on-Death for Security (TOD)
Registering transfer-on-death registration is an important aspect of saving yourself from the probate process. You can register your stocks, bonds, and security assets in the transfer-on-death (TOD) form. The specified beneficiary receives the brokerage accounts and assets automatically at the time of a decedent’s death without any probate proceedings.
Payable-on-Death Designations for Bank Accounts (POD)
The payable-on-death account entails a beneficiary’s name, which is decided by the person opening a brokerage or a bank account. The law states that the decedent preserves all rights to an account until his or her death. A beneficiary can claim the account straight from the bank without going through the probate evaluation by the court.
Life Insurance at Your Bay
If you have signed up for life insurance with an optimum level of coverage, it is probably the best decision of your life. If you have life insurance, post your death, the beneficiary will receive the profits from the company free from the hassles of probate. Not forgetting, the inheritance is not subjected to the regular income taxes, which is a bonus.
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