5 Proven Probate Avoidance Strategies for Estate Planning

Probate is a legal process that distributes a deceased person’s assets according to their will or, if there is no will, according to state law. However, probate can be a costly, time-consuming, and public process. As a result, many people want to avoid probate in their estate planning efforts. 

There are several proven probate avoidance strategies that can help you avoid the probate process and ensure that your assets are distributed smoothly and efficiently after your death. Here are five of the most effective probate avoidance strategies.

1. Living Trusts

A living trust, also known as a revocable trust, is a legal arrangement in which you transfer your assets to a trust while you’re still alive. The trust is managed by a trustee, who is typically you while you’re alive, and then by someone else after you pass away. When you create a living trust, you name beneficiaries who will receive your assets after your death.

One of the primary benefits of a living trust is that it helps you avoid probate. When you transfer your assets to the trust, they are no longer part of your probate estate, so they do not have to go through the probate process. This means your beneficiaries get their inheritances faster without as much expense and hassle than if your assets had to go through probate.

Another benefit of a living trust is that it can help you maintain control over your assets while you’re alive. As the trustee, you can continue to manage and use your assets as you normally would. You can also change the terms of the trust or revoke it entirely if your circumstances change.

To set up a living trust, you’ll need to work with an attorney who specializes in estate planning. The attorney can help you create the trust document and transfer your assets to the trust. It’s important to make sure that you properly fund the trust by transferring all of your assets to it, or else some of your assets may still have to go through probate.

2. Joint Ownership

Joint ownership is another probate avoidance strategy that can be used to transfer assets to your beneficiaries outside of probate. When you own property jointly with another person, such as your spouse or children, the property automatically passes to the surviving joint owner(s) upon your death without the need for probate.

There are two common types of joint ownership: joint tenancy with right of survivorship and tenancy by the entirety. Joint tenancy is a form of ownership where each owner has an equal interest in the property, and when one owner dies, their share automatically passes to the surviving owner(s). Tenancy by the entirety is a type of joint ownership that is only available to married couples and provides additional legal protection against creditors.

To avoid probate through joint ownership, it is essential to seek the guidance of an attorney who can ensure that you set up your joint ownership correctly and address any potential concerns. This may include drafting a joint agreement that outlines the rights and duties of each party as well as how conflicts should be handled in the event they arise.

3. Gifts

Making gifts during your lifetime is another probate avoidance strategy that can help you transfer assets to your beneficiaries without the need for probate. When you give a gift, you transfer ownership of the asset to the recipient, who then becomes the new owner.

A benefit of making gifts as a probate avoidance strategy is that it can be a simple and straightforward way to transfer assets to your beneficiaries. However, there are some potential downsides to consider. For example, making large gifts can trigger gift taxes, and it’s important to work with a tax professional to ensure that you’re complying with the relevant tax laws.

To effectively use gifts to evade probate, it is critical that you plan carefully and consider the potential legal and taxation ramifications. You might want to limit the size of your presents in order to keep away from paying gift taxes, or possibly create a trust which will manage the assets while ensuring they’re dispersed according to what you wanted. With proper planning, gifting can be an effective way of avoiding probate.

4. Pay-On-Death (POD) and Transfer-On-Death (TOD) Accounts

Pay-On-Death (POD) and Transfer-On-Death (TOD) accounts are other probate avoidance strategies that can be used to transfer assets to your beneficiaries outside of probate. These accounts allow you to name a beneficiary who will receive the account assets upon your death.

POD accounts are typically used for bank accounts, while TOD accounts are used for investment accounts such as stocks and mutual funds. When you set up a POD or TOD account, you can name one or more beneficiaries who will receive the account assets after your death. The beneficiary simply needs to provide proof of your death to the financial institution to claim the assets.

One of the benefits of POD and TOD accounts is that they can be a simple and straightforward way to transfer assets to your beneficiaries outside of probate. Additionally, you can generally change the beneficiaries on the account at any time, giving you flexibility in your estate planning.

To guarantee your POD and TOD accounts are established accurately and any possible problems or complications can be addressed, it is vital to team up with an attorney. Moreover, you must ensure that these accounts align perfectly with the remainder of your estate plan in order for them to reflect what you truly want.

5. Beneficiary Designations

Beneficiary designations are another probate avoidance strategy that can be used to transfer assets to your beneficiaries outside of probate. This strategy is commonly used for retirement accounts such as IRAs and 401(k)s, as well as for life insurance policies.

When you set up a beneficiary designation, you name one or more beneficiaries who will receive the account assets or insurance proceeds upon your death. The assets are transferred directly to the beneficiaries outside of probate, which can help ensure a smooth and efficient transfer of your assets.

One of the benefits of using beneficiary designations as a probate avoidance strategy is that they can be a simple and straightforward way to transfer assets to your beneficiaries. Plus, you can typically change the beneficiaries on the account at any time, giving you flexibility in your estate planning.

To maximize the effectiveness of beneficiary designations as a probate avoidance technique, it is essential to consult with an experienced attorney. Doing so will guarantee that they are accurately set up, and any possible issues addressed. Additionally, make sure your decisions regarding them agree with those in the rest of your estate plan; this way, you can be certain that everything goes according to your wishes.

Start Planning Today—Call Doane & Doane

If you are interested in using probate avoidance strategies for estate planning, the experienced attorneys at Doane & Doane can help. Our team has extensive experience helping clients protect their assets and plan for their future.

We understand that estate planning can be a complex process, so we strive to provide personalized attention and reliable advice every step of the way. If you have any questions or need help creating an estate plan, please don’t hesitate to contact us at 561-656-0200. With our guidance, you can rest assured that your assets are in good hands!

The information in this blog post is for reference only and not legal advice. As such, you should not decide whether to contact a lawyer based on the information in this blog post. Moreover, there is no lawyer-client relationship resulting from this blog post, nor should any such relationship be implied. If you need legal counsel, please consult a lawyer licensed to practice in your jurisdiction.