How Can You Avoid Probate?
What is the probate court? To put it simply, it’s the court that steps in and controls where your assets go if you die without a trust. The probate process is a costly and time-consuming legal proceeding that should be avoided if possible – and to most people’s surprise, it cannot be avoided even if you have a will.
So what does the probate process look like, and how do you avoid it? Let’s take a look.
The Probate Process
During the probate process, the probate court will first review the deceased person’s assets. Then the court will appoint an administrator to maintain the deceased’s properties and ensure all of his or her debts are paid off. If the deceased has a will, then the administrator will oversee the transfer of the remaining assets to the beneficiaries. If the deceased does not have a will, then the court will contact parties of interest – Medicaid, relatives, and so forth. The parties will then begin a lengthy court case to decide who gets how much of the assets.
Here are some of the disadvantages of going to probate court:
- The costs involved in the Probate Process include filing fees, attorney fees, and newspaper publication fees.
- The Probate Process can last for three months-3 years.
- The Probate Process also makes the deceased’s properties, the nature, value of their assets, debts, and the asset distribution a matter of the public record, taking away all the family’s privacy.
- Once an estate is in the probate court, anyone can go after it, making it difficult for relatives and loved ones to keep any of the estate.
If you want to avoid the above scenarios, then your best bet will be to avoid probate court entirely. Here are some ways you can avoid going to the probate court:
Have a Small Estate
Many states make a probate exception for small estates. The size of the estate will depend on the county you are in. So, if you have an estate small enough, it will be an exemption from the Probate Process.
Give Your Assets Away While You’re Alive
You may potentially lower your estate’s value and get it into a simplified probate process or exemption from it while you’re still alive. You can transfer your assets to your friends and family before you die instead of leaving them to your beneficiaries after you die. This will decrease the value of your estate going through probate and reduce or even avoid future state and federal estate taxes.
Some methods of transfer include filing quitclaim deeds or changing title ownership.
Establish a Revocable Living Trust
This is the foolproof method of avoiding the Probate Process. Unlike a will, which distributes your assets after you die, a living trust allows you to place your assets in a trust, and a trustee manages that for your beneficiaries. A Revocable Living Trust enables you to avoid the probate process because your properties and assets are already divided and distributed for your beneficiaries in the trust. You can name yourself a trustee while you’re alive, which enables you to continue to use your assets. After you pass, then your selected person will become a trustee and manage the property for your beneficiaries.
One of the main cons of a will is the cost of the probate process. In probate, the court fee is deducted from the gross estate and can be as high as 10% of the total estate amount. This money can be better used in paying the trustee fees. A living revocable trust will help you avoid the costly Probate Process.
Hold Properties Under Joint Ownership
Another way to avoid probate is to own property under joint ownership. If you own property under common license, the property will automatically pass to the other owner without going through probate. You need to choose the other owner carefully, and the property will be theirs after your passing away. If you have a spouse, make sure that the spouse has the right
Make Sure Your Accounts are Payable on Death
Bank Accounts and other accounts payable on death go directly to your chosen beneficiary without ever going through the Probate Process. This is also a straightforward way of keeping your assets out of probate court.
Probate Laws aren’t similar in every state, so you must research probate laws in your state before trying to keep your assets and properties out of probate court. Probate Court can be costly and an emotional rollercoaster for your family, so to know more about avoiding the probate court, you should contact and consult with a Legal Services Corporation.