Giving probate the slip

On Behalf of | Aug 8, 2017 | blog

Everyone knows that probate is where estates are subject to second-guessing by the courts and estate taxes.

The question is, How do you avoid probate? One rule of thumb is: Don’t own so much.

If your assets are redefined so that they are no longer yours, they are not subject to the probate process.

Here are some solutions involving your home and financial accounts:

Co-own the property. There are several ways you can own a property with another party, including joint tenancy. When you die, the property sidesteps probate and goes directly into your co-owner’s sole possession.

Give it away. Many people purposely designate a child or other relative as the new owner of a home or other property.

Put it in a living trust. A trust provides shelter from taxation while you retain a degree of control over it as long as you live.

Earmark an account as Payable On Death (POD). Your bank accounts pass directly to your named beneficiary.

Earmark investments and other properties as Transfer On Death (TOD). This works the same way as POD.

Name beneficiaries on life insurance and retirement accounts. The money goes straight to the parties you cite.

There are many other ways to keep assets out of probate. Earnings owed to you at the time of death do not pass through probate. Likewise, shared savings bonds. Household goods such as furniture, dishes, clothes and the lawnmower are exempt.

In fact, the only property that must go through probate are assets that you alone own. So spend some time with an attorney you trust to identify assets you wish to protect.

This is not as difficult a process as it sounds – the paperwork and the filing of documents are usually quite simple.

The important thing is to do it now, rather than wait until it is too late!