Preventing probate should not be a problem. There are simplified yet efficient ways to make sure that all or most of your estate is directly granted to your heirs to avoid the difficulties of probate court.
Advantages of a living trust
Living trusts were created to put a stop on probate. The upside of putting your important property in a trust fund is that upon your passing, the trust property is not a probate estate. However, it is considered federally taxable because the trustee owns the property instead of you. After your death, the trustee can conveniently handover the trust property to the recipients you have choose, without probate involved. Similar to a will, you may list your family or friends you wish to have included in the trust document.
Payable upon death funds
You can also allocate your bank and retirement blances to payable-on-death funds. You can easily designate a beneficiary by completing a simple form. Instead of going through the probate process the money will go straight to your beneficiary when you die. A few states also permit transfer-on-death real estate property that allow you to assign your property with a deed that will not get carried out until your death.
Property with joint ownership
Three types of joint ownership offer a trouble-free process to sidestep probate when the original owner dies. To share a title with another person in a way that prevents probate, you document that you are the owner and how you wish to designate the title. Typically, no more documentation is necessary. With the death of either owner, the property gets handed to the other joint owner without probate.
You can avoid probate by owning property as follows:
- Joint tenancy with right of survivorship. When one owner dies assets are transferred to the joint owner immediately, without probate.
- Tenancy by entirety. Some states may allow married couples to own a title as a “tenancy by the entirety” rather than joint tenancy. Entitlement to the other partner is similar to joint tenancy but is allowed strictly to a married couple or by same-sex partners in states that allow same sex registration. Probate can be avoided in exactly the same manner as joint ownership.
- Community property with right of survivorship. If you live or have property in Alaska, Arizona, California, Idaho, Nevada, Texas or Wisconsin, another way to jointly own property with your spouse is an option to allow community property with the right of survivorship. If you own property in this way, when one spouse dies the other spouse automatically owns the property.
Gifting your property
Gifting while you are living allows a simple shortcut that is easy to understand. If you do not own the assets when you die, there is no probate needed. Generally, gifting reduces probate because the more the more the property is worth, the higher the expenses of probate. Also most in most cases gifts are not taxable.
Simplifying for small estates
Currently, nearly every state allows simple ways to eliminate probate or avoid it entirely if the estate is considered small. The definition of small varies by state. At Hanson and Manzo, we can help with wills, probate and estate planning. Call us today at 608-831-2529 to set up an appointment.