Probate is the legal process through which a deceased person’s assets get distributed to their heirs or beneficiaries. It sounds straightforward, but it can be lengthy, costly and public.
Therefore, individuals should explore ways to minimize or even avoid the probate process.
Create a comprehensive estate plan
The foundation of minimizing probate lies in crafting a comprehensive estate plan. This includes creating a will, establishing trusts and designating beneficiaries for your assets.
Consider joint ownership
Assets held jointly with rights of survivorship automatically transfer to the surviving owner(s) upon death. These assets can include joint bank accounts, real estate and vehicles. Consider the implications of joint ownership carefully.
Utilize payable-on-death and transfer-on-death designations
POD and TOD designations allow you to name beneficiaries for certain assets, such as bank accounts, retirement accounts and securities. Upon your death, these assets pass directly to the named beneficiaries without going through probate.
Establish living trusts
Only 43% of individuals over 55 have wills, much less living trusts. Living trusts are versatile estate planning tools that enable you to transfer assets to a trust during your lifetime. As the trustee, you maintain control over the assets. Upon your death, a successor trustee manages your asset distribution according to your instructions. Assets held in a living trust typically bypass probate.
Life changes, and so should your estate plan. Marriage, divorce, births, deaths and significant financial changes can all necessitate updates to your plan. Regularly review your estate planning documents to ensure they accurately reflect your wishes and current circumstances.