Probate is a legal process by which the court oversees the property distribution of a deceased individual. Unfortunately, there’s no simple and short way to understand probate – it’s a process through which you want to protect your heirs after your death. Probate can be avoided relatively but people often fail to take necessary steps when they plan about their estate. From living trust to joint ownership there’s a mechanism for it.
If you are looking for ways about how to avoid probate, you need to go through the article.
How to avoid probate after death?
Several ways to avoid probate are discussed below:
- Establish joint property ownership
- Establish Financial Securities and Accounts to transfer to the heirs upon your death
- Include gifts
- Form a living trust
- Make a will
- Set up a transferable property
The legal and equitable distribution of your property and every other asset after your death is overseen by a special court called probate court. Once the court is informed about your death, it will assign an appointee against your assets to ensure the debts named under the deceased person are paid and other property matters like the distribution of the property and assets according to what the person has mentioned in his/her will. According to the state probate law, in the absence of the potential will, the assets and the property will be distributed to the closest family relatives.
What is probate?
Probate is the process of partitioning the assets that belonged to the deceased. In addition to that, probate is divided into two main categories: intestate and testate.
Intestate defines the scenarios where a person dies without making a will. It is the worst scenario that people want to avoid in the United States. If the will is formed by the person before he/she dies, the probability to call the will intestate remains there if the will is not formulated according to the probate laws defined by the state.
For this, an administrator is appointed by the probate court to look after the legal claims against your estate like paying private and government bills. The administrator can be selected from the relatives of the deceased. It is also necessary for the administrator to publish the notification of outstanding payments and debts with the death notice of the deceased person in the newspaper. Therefore, it will be easy to notify creditors who are eligible to make claims.
The administrator will have additional responsibilities to find and distribute the property to the relatives of the deceased for example parents, spouse, and children. The property may include real estate, business interests, and securities.
If the will is formulated according to the state laws and is valid to be processed then it will be called a die testate. The estate of the deceased person will be partitioned according to the directives mentioned in the will via an executor. The custodians and guardians of the will have one month to testify the authenticity of the will through the probate court as the testaments of the will are now deceased.
The probate court will designate an executor to execute the conditions and terms as they are written in the will. The executor will then find out the value of the total property left by the deceased. It will be valued as it was at the time of the death.
Once the value has been found out, the income tax returns, creditors’ debts, and estate taxes have to be settled. Now the remaining assets and property are ready to be partitioned.
Ways to avoid probate
Going through the probate process can be emotionally and financially frustrating – one that you want your heirs not to suffer more as they already have suffered a loss. To know how to avoid probate scroll down.
Establish joint property ownership
If you want to avoid probate, this is relatively an easy process to do so. Through joint-owned property with the right of survivorship will transfer the property and assets to the partner automatically without requiring the need of a will.
Joint ownership has typically three ways:
- Joint tenancy with survivorship rights
- Entireties tenancy (in some states for married couples)
- Community property
Establish financial securities and accounts to transfer upon death
Many banks provide you with the documents to mention the joint beneficiary of your account and assets in case of events like death. This applies to both cash and equity account types. Regarding the accounts which are non-cash and non-equity, you can also designate a beneficiary in the bank documents or on your will to have the right to avoid liquidation of bond, stock, and securities to pay them out.
Distribute assets as gifts
To avoid probate after your death, you can gift your assets and property. This is not subjectively related to your death, this can be done anytime. For instance, when you retire from your work, start gifting your assets to whoever you want to be a part of your property.
Form a living trust
If you have a list of beneficiaries and a relatively larger estate, then it is a better option to create a living trust. It is also known as revocable trust that means you can even make changes to it later. A revocable trust allows you to add and take out the assets from your estate.
It is also said that revocable trust would be enough to avoid probate court and probate process. While remaining as a trustee of the living trust you can even execute a legal document that shows that the living trust is your separate property.
Make a will
According to an estimate, over 50% of Americans over the age of 55 do not create a will. To reduce the significant damages from the probate and to save your heirs from the long-drawn and lengthy process of having a probate court battle, you must make a will.
The procedure of making a will can vary from state to state, but you have to comply with some important components for this:
- The will should be formulated in writing
- The will should be signed by the owner in front of two witnesses
- The witnesses also have to sign the will (though they don’t need to know about your will).
In some states, a holographic will is also accepted which is handwritten and testified by the testator and does not need witnesses.
Set up a transferable property
Likewise, with equity and cash accounts you can also designate property to beneficiaries to transfer them on your death. However, for this, you need to have a special deed and you can only avail yourself this option if you have the property in any of these states:
- New Mexico
- North Dakota
- South Dakota
- West Virginia
- Washington D.C.
- Wyoming, and
Since planning to make a will while you are alive can trigger you emotionally and for this people tend to avoid even talking about it in person. Unfortunately, these emotions lead you to a lack of planning and people often leave their heirs in a complicated probate process.
Keep in mind that if you don’t have any living kin, after your death everything that is named under you will be handed over to the state. If you will have survivors after your death, then it is best to consult a probate attorney to know how do you avoid probate courts and how to avoid probate after death.
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