How To Avoid Probate
The death of a loved one will always be painful and challenging to deal with. Having to deal with court visits and fees on top of the emotional fallout of a death sounds to many people like a special circle of hell.
Unfortunately, dealing with probate court after the death of a loved one is the norm for most people. What is probate court, exactly? It’s the legal process through which a person’s will is carried out. The court is in charge of identifying and ensuring that all creditors are paid what they’re owed and all property goes to the proper benefactors.
On its face, those all sound like good things, but in practice, probate court is an extremely unpopular option.
Why Avoid Probate Court?
The short answer is that it’s expensive and slow.
Even if you lay out in your will exactly what should go to whom, your family can end up losing about 5% of the total amount of property you leave behind simply in court and lawyer’s fees. And they can expect to wait around a year to see any of what’s left over.
5 Ways to Avoid Probate Court
If you want to ensure your loved ones avoid that fate after your death, you have a few options that will get your property in the hands of benefactors while skipping the pain of probate court.
1. Living Trust
A living trust is like a will, with the notable difference that it doesn’t have to go through probate court to be applied upon a person’s death. Instead, whatever trustee you name will be in charge of transferring the property to those you specify.
2. Payable-on-death Accounts
Many banks will allow you to name beneficiaries for your accounts so that, upon your death, the bank will transfer the account funds directly to the person named.
3. Transfer-on-death Registration
This is like a payable-on-death account for stocks and bonds. In most states, you can register a specific beneficiary to take over any stock, bond, and brokerage accounts you have after your death. Unfortuantely, if you live in Texas or Louisiana, this isn’t an option for you at this time.
4. Joint Ownership
Any property jointly owned will go automatically to the other owner or owners without having to go through probate court.
You can always give away some or a lot of your property while you’re alive. If your loved ones are already the new owners of the property at the time of your death, it’s theirs, period.
Is Avoiding Probate Court Ever a Bad Idea?
You’ll notice most of these options require doing a certain amount of work to get around the need for probate court. That work may not be too extensive if your list of beneficiaries is short – if, say, everything you own is to going to your spouse or you only have one child. If you have a large family and want to ensure something goes to everyone, these options can quickly become complicated and having a will may be the better choice.
Also, how probate court works varies from state to state. It could be that in your state, going through probate court will cost less and be less trouble than trying to get around it.
What move is best for you depends a lot on your particular circumstances. If you’re in doubt, talk to an expert to get some help understanding your options.