The probate process is costly, time consuming and stressful. Fortunately, you can create an estate plan with the goal of most your assets avoiding the probate process.
There are four ways to pass down property without it going through probate:
- Revocable living trust: Any assets inside a living trust are owned by the trust, not you. Subsequently, when you pass away, these assets are transferred to your heirs without going through probate.
- Joint property ownership: The most common forms of joint property ownership include community property, tenancy by the entirety and joint tenancy with a right of survivorship.
- Death beneficiaries: There are many financial assets that allow you to name a beneficiary, such as an IRA and 401(k) retirement account. This allows your beneficiary to receive the asset shortly after your passing, as opposed to after the probate process.
- Gifts: It's obvious to some but most never take advantage of this way for an asset to avoid probate. When you gift an asset to someone while you're living, they become the owner. This is in contrast to leaving it to them in your will, which subjects it to probate.
Creating an estate plan with the goal of avoiding probate is something everyone should consider. There's a good chance that one or more of the strategies above will suit your estate planning goals.
Even if you have an estate plan in place, you can alter it with the idea of some or all of your assets avoiding probate. All it takes is knowledge of the above strategies, and a plan for taking action.