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Keeping your family out of probate court may be the best thing that you can do for them. The death of loved ones is emotionally devastating. It is even more stressful when families end up in probate court, potentially facing long and expensive legal battles, while waiting to close an estate. Fortunately, there are many ways to ensure that your family does not have to face a long legal process to wrap up your estate.
Probate is the legal process that takes place after someone passes away. If there is a will, then the will is submitted to the probate court to review and ensure that it is valid. Once the court approves of the will, the executor can begin paying off debts and distributing property. If there is no will, the court will order that property be distributed according to state law.
Probate can be time-consuming and costly for your family members, and beneficiaries and potential heirs may challenge the will, which can lead to a lengthy battle. It is often preferable to take whatever steps you can to avoid probate when it comes to most of your property.
The following are common ways to do so:
When you create a living trust, you will transfer the ownership of certain property to the trust, and that property will not have to go through probate. Instead, the property will need to be distributed in the manner you set out in the trust document. Many people hesitate to create a trust, as they do not like the idea of “no longer owning” their property. However, when you create a trust, you are the trustee, which means you have full access to your assets and property, as well as the ability to control and manage it. When you pass away, your designated successor trustee will take over, and distribute property in accordance with your wishes.
Many financial accounts give you the option of naming the person or people who will receive the funds in your account or other benefits upon your death. This is done through beneficiary or payable on death provisions. When you have an account with such provisions, those assets will transfer directly to the beneficiary and will not have to go through probate. Such accounts may include:
- Checking and savings accounts
- Money market accounts
- Retirement and pension accounts
- Life insurance policies
Joint Ownership and Beneficiary Accounts
If you own property jointly with rights of survivorship with another person, such as your spouse, they will inherit your ownership stake automatically when you pass away, skipping the probate process. In some states, if you do not want a joint ownership, you can have a beneficiary deed, which is similar to a beneficiary account. If you own a home and name your adult child as the beneficiary on the deed, ownership will transfer to them automatically with no need to go through probate.
Planning for distribution of your assets, after your death, can be a complicated process, and each state may have different laws on what specific options are allowed. Avoiding probate may include one or many of the options listed, as well as other options. It is important to consult with an estate planning professional before deciding which options are best for you and your family.