How do I/we avoid Probate (Estate Administration)
I am often asked how can I/we avoid probate when one of us or worse a simultaneous death occurs? Probate can be expensive and also very time consuming. Avoiding burdening a surviving spouse or child(ren) with estate administration is in fact possible. Choosing a probate lawyer to represent the estate is extremely important.
Read More: Case Study: Probate Avoidance
So, the question is how can probate be avoided? Here are some examples:
- Jointly owned property: With a tenancy by-the entirety as is the case most of the time with ownership of a home, all right title, and interest in that property passes to the surviving spouse by operation of law and free from the probate process. The same holds true when owning a home as an unmarried couple or with multiple individuals. Upon the death of one of the joint tenants, the surviving joint tenant(s) will become the owners by right of survivorship.
Joint ownership of other property such as a bank account will yield the same result as above upon the death of a joint tenant.
- Beneficial designations: With regard to bank accounts, you can also consult with your bank manager to assist you with setting up a “payable on death” (POD account whereby upon the death of the account holder, the named beneficiary will inherit the bank account without having to deal with the probate process.
If you are working with a financial adviser, he or she can assist you with setting up “transfer on death” (TOD) accounts for your investments.
- Retirement accounts: One very familiar technique to avoid probate is something that most of you are already aware of and that is how and when your retirement accounts were set up. Typically, the way it works is that you are the owner of the account and you name a principal beneficiary as well as a contingent beneficiary to inherit upon your death without having to deal with the probate process.
- Trusts: Having a trust to fund or re-title your accounts to is one of the most recognized ways to avoid probate. You are essentially creating a mechanism whereby your trust owns the assets which are ultimately not subject to probate upon your death. Your trustee, which can be you in most cases, manages your trust owned assets. Best of all, is that your trust or family trust owns is “private” as opposed to a Last Will and Testament which is filed with the court and within the public domain. Funding your trust with bank accounts or re-titling your home and/or investments will prevent the costly time-consuming probate or estate administration process.