Tips for Avoiding Probate

What is probate?

Probate is a legal proceeding where a court distributes the property of a deceased person. A probate case usually lasts at least a few months; some probate cases last many years. The costs of filing and handling a probate case generally ranges in the thousands of dollars.

Because of the high cost and time-consuming nature of probate cases, many people seek to avoid probate. This article will explain some of the common ways you may be able to avoid probate. (Note: While the information in this post is correct in many U.S. states, estate laws vary. Consult an estate planning attorney or financial planner in your state for the most accurate, up-to-date information in your jurisdiction.)

Common ways to avoid probate

Give gifts during your lifetime.

If you give property away during your lifetime, the recipients of the gifts won’t have to go through probate court to get the property after you die.

Place your property in joint tenancy with right of survivorship.

You can place property in joint tenancy, and name yourself as one of the joint tenants. Then, name another person, or persons, as the other joint tenant(s). You’ll still have an ownership interest in the property as long as you’re alive. But, after you die, all that the other joint tenant has to do, is, produce a copy of your death certificate. If the property in joint tenancy is land, the joint tenant has to file your death certificate with the local land records office. If property is in joint tenancy, and at least one joint tenant is still alive, the property doesn’t have to go through probate court.

Write a transfer on death deed.

A transfer on death deed says that, immediately upon your death, someone else automatically takes your property. All that person must do, is produce a copy of your death certificate.

A difference between a transfer on death deed, and a joint tenancy is, you can usually revoke a transfer on death deed whenever you want, without the consent of the other person. If you place property in joint tenancy, you generally can’t take it out of joint tenancy without the other joint tenant’s permission. So, with a transfer on death deed, you still retain more control over the property than you would if the property was in joint tenancy. A transfer on death deed is legal in some states, but not others; some states require that the deed be in a certain format.

Name someone as the beneficiary of your property.

If the property is not land, you may be able to name someone as the beneficiary of your property upon your death. For example, banks often allow you to name someone as the beneficiary of your account. Insurance companies may allow you to name someone as the beneficiary of your insurance policy. This type of arrangement is also often permissible with stocks, annuities, and employee retirement benefits. As the financial institution, in control of your property, if they will allow you to name a beneficiary.

You generally can’t name a beneficiary to receive land at the time of your death. To keep land out of probate, you’ll need another type of estate planning device.

Create a trust.

A trust is a legal entity where one person (the trustee) manages property for the benefit of another (the beneficiary.) The trustee is the legal owner, and the beneficiary is the equitable (or beneficial) owner.

You may use a trust to avoid probate, because a trust continues in existence after you die. One popular type of probate-avoiding trust is called a Dacey trust. In a Dacey trust, you name yourself as the trustee and the beneficiary during your lifetime, and name someone else as the trustee and the beneficiary after you die. An advantage of a Dacey trust is that you may avoid probate, but you will have control over, and access to, the trust property as long as you are alive. If you specify in the trust document that the trust is revocable, you will be able to revoke the trust any time, if you so choose.

Conclusion

Because probate can be a difficult and expensive process, you may be able to benefit your family (or other heirs) if you take steps to avoid probate. If you are interested in any of the estate planning devices I have mentioned above, contact an attorney or estate planning advisor today.

Author Bio:

Attorney Kyle Persaud is the founder of Persaud Law Office based in Bartlesville, OK. Kyle has years of experience assisting the residents of Bartlesville in a variety of legal matters including family law, civil law, and immigration. Mr. Persaud holds a B.A. from Oklahoma Wesleyan University, and a J.D. from the University of Tulsa College of Law.