Explaining the Law, Empowering You

As you may already know, not all of a deceased person’s assets need to go through probate. Probate can be avoided through the use of a number of legal mechanisms including:-

1. payable on death, transfer on death or joint accounts;
   
   
2. insurance policies;
   
   
3. joint ownership of property;
   
   
4. revocable living trusts; 
   
   
5. lifetime gifts; and
   
   
6. having property valued at or less than the limit allowed for a simplified procedure that many states allow when estates are small.

Of course, if you do not provide for the transfer of all of your assets by means of the above mechanisms, or indeed any of the other probate avoidance mechanisms, probate will be necessary.

Probate avoidance measures themselves have a number of advantages. For example, they are flexible and easy to set up. Bank accounts and insurance policies can be established, amended and terminated with little hassle or cost. As a result, you can easily and quickly change the beneficiaries of your assets or the amount by which you intend them to benefit by means of a simple visit to the bank or your insurance broker. And after you pass away, the only document that your beneficiaries will typically need to present to the bank or insurance company is a death certificate evidencing your death. With that, the financial institution should be happy to make arrangements to have the relevant proceeds transferred in to the names of your beneficiaries or paid out to them.

There are however some disadvantages to avoiding probate. You need to be very careful to ensure that all of your probate avoidance alternatives are working together to avoid probate (whether in whole or in part) and, more importantly, to distribute your assets in accordance with the overall objectives of your estate plan. In this regard, you need to pay specific attention to the beneficiaries named in joint bank accounts, insurance policies, the manner in which real estate (i.e. as a joint tenancy with a right of survivorship) is held etc. Any lack of attention could result in one person receiving a lot more than you had intended to the detriment of someone else. And, don’t forget, by the time a problem materializes with any of your probate avoidance mechanisms you may not be around to remedy it!

The most commonly used method to avoid probate is a Revocable Living Trust. Revocable Living Trusts avoid probate by transferring your assets from your own personal name to the name of a trust. Because the asset is not in your name at the time you die it will not form part of your probate estate and can therefore avoid probate altogether. Following your death, the successor trustee in charge of your Living Trust simply transfers the asset in accordance with the terms of your Living Trust.

Read More Living Trust

Read More Estate Planning Articles

	Make Your Own Living Trust And Avoid Probate   This book will guide you step-by-step through the process of creating your very own living trust, transferring assets to your living trust and subsequently managing those assets. All required forms are included.
Price: $27.95