4 Strategies To Avoid Probate You Should Know

Probate can be a lengthy and costly process that many people want to avoid for their loved ones. When a person passes away, their estate typically goes through this legal procedure to validate the will and distribute assets. Unfortunately, this process can delay asset access and incur additional expenses. You should know these strategies to avoid probate and enjoy a smoother transition of assets to your heirs.

Establishing a Living Trust

Living trusts are perfect for avoiding probate because they hold your assets during your lifetime and specify how they should be distributed after your death. When you place assets into a trust, they’re no longer considered part of your estate and, therefore, don’t have to go through probate. This provides more control over asset distribution and can save time and costs associated with probate.

Gifting Assets While Alive

Another strategy is gifting assets while you are alive. By giving away property or money to loved ones during your lifetime, you reduce the size of your estate and the value subject to probate. Depending on current laws, you can gift a limited amount of money each year without incurring taxes. This approach can be particularly beneficial if you want to see your loved ones enjoy their inheritance while you’re still around.

Naming Beneficiaries on Accounts

Naming beneficiaries directly on accounts, such as life insurance policies, retirement plans, or payable-on-death bank accounts, is another pragmatic approach. By designating a beneficiary, these assets automatically transfer to the named individual without going through probate upon your passing. Keep beneficiary information updated to ensure the right individuals receive the intended benefits.

Creating Joint Ownership of Property

Joint ownership of property is a viable tactic to avoid probate. When you own property jointly with rights of survivorship, it automatically passes to the surviving owner(s) without the need for probate proceedings. This is common in real estate and bank accounts. However, it’s important to understand the implications of joint ownership, such as potential exposure to the financial liabilities of the other owner.

Knowing these strategies to avoid probate can ease the burden on your loved ones during a difficult time. Each has its own benefits and considerations, and it’s wise to evaluate which approach aligns best with your estate planning goals.