When you pass away, your loved ones will have a lot on their plate. They will be mourning your passing, which will be hard enough. On top of that, they will have to worry about arranging the funeral, figuring out who your executor is, and carrying out your final wishes contained in your will. There are methods you could use to make things much simpler for them, so that they can focus on mourning and coming together in that difficult time. One of these methods is avoiding probate altogether.
What is probate?
Probate is a process overseen by a probate court in which your executor takes care of your estate. Whoever you name as executor of your estate in your will is in charge of paying any taxes due and distributing your assets according to the terms of your will.
Depending on how complex your will is, how extensive your assets are, and if there are any challenges to your will, probate can be a lengthy process. The longer it takes to wrap up probate, the more money will come out of your estate to pay for it, meaning that there will be less for your intended loved ones to receive.
How can I avoid probate?
Put simply, if you don’t own anything exclusively, there will be no need for probate. In other words, you can avoid probate by setting up an estate plan in which everything you own gets immediately transferred to other people upon your death.
For example, you can have your attorney set up a revocable living trust for you. Then you transfer all of your property to this trust. You will still be able to enjoy your property while you are alive, but the moment you pass away, your trustee will transfer everything in the trust to your loved ones according to your wishes.
The use of trusts is one of the most common ways of avoiding the probate process, but it’s not the only way. For instance, you can also put your money into a Payable on Death (POD) account. This is an account that, upon your death, immediately changes ownership to someone you specify beforehand.
If you want to, you could also begin to gift your possessions and assets away during your lifetime. If you do this, be mindful of staying under the threshold of the federal gift tax. If you give away too much too quickly, you might have to pay taxes on the transfers. That’s why it’s wise to establish with your attorney a careful plan for the disposition of your property.
No one wants a large portion of their hard-earned wealth to be lost to court fees and taxes. Planning to avoid probate is a great way of making sure that more of your estate passes to your intended loved ones.