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How
To Avoid Probate Learn the most popular
ways to avoid probate.
Avoiding probate doesn’t have to be difficult. Many people
can use these simple and effective ways to ensure that all,
or some, of their property passes directly to their heirs,
without going through probate court.
Revocable Living Trust
Living trusts were invented to let people make an end-run
around probate. The advantage of holding your valuable
property in trust is that after your death, the trust
property is not part of your estate for probate purposes.
(It is, however, counted as part of your estate for federal
estate tax purposes.) That's because a trustee -- not you as
an individual -- owns the trust property. After your death,
the trustee can easily and quickly transfer the trust
property to the family or friends you left it to, without
probate. You specify in the trust document, which is similar
to a will, who you want to inherit the property.
Pay-on-Death Accounts and Registrations
You can convert your bank accounts and retirement accounts
to payable-on-death accounts. You do this by filling out a
simple form in which you list a beneficiary. When you die,
the money goes directly to your beneficiary without going
through probate. You can do the same for security
registrations, and, in some states, vehicle registrations.
Joint Ownership of Property
Several forms of joint ownership provide a simple and easy
way to avoid probate when the first owner dies. To take
title with someone else in a way that will avoid probate,
you state, on the paper that shows your ownership (a real
estate deed, for example), how you want to hold title.
Usually, no additional documents are needed. When one of the
owners dies, the property goes to the other joint-owner --
no probate involved.
You can avoid probate by owning property as follows:
- Joint tenancy with right of survivorship. Property owned in
joint tenancy automatically passes, without probate, to the
surviving owner(s) when one owner dies.
- Tenancy by the entirety. In some states, married couples
often take title not in joint tenancy, but in "tenancy by
the entirety" instead. It's very similar to joint tenancy,
but can be used only by married couples (or in a few states,
by same-sex partners who have registered with the state).
Both avoid probate in exactly the same way.
- Community property with right of survivorship. If you are
married (or in California, if you have registered with the
state as domestic partners) and live or own property in
Alaska, Arizona, California, Nevada, or Wisconsin, another
way to co-own property with your spouse is available to you:
community property with the right of survivorship. If you
hold title to property in this way, when one spouse dies,
the other automatically owns the asset.
Gifts
Giving away property while you're alive helps you avoid
probate for a very simple reason: If you don't own it when
you die, it doesn't have to go through probate. That lowers
probate costs because, as a general rule, the higher the
monetary value of the assets that go through probate, the
higher the expense.
Simplified Procedures for Small Estates
Almost every state now offers shortcuts through probate --
or a way around it completely -- for "small estates." Each
state defines that term differently.
For step-by-step information on how to plan your estate,
including how to avoid probate and reduce estate taxes, get
Plan Your Estate, by attorneys Denis Clifford and Cora
Jordan (Nolo).
© 2010 Nolo
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