No one likes to think about death - especially their own. However, if you plan to leave a considerable estate to heirs, you need to take steps to ensure they can get their inheritance as quickly as possible. Whenever someone passes away, their estate must go through probate. This is where your final will is determined to be valid or invalid. Probate can take anywhere from a few days to weeks or even years, if the will's validity is contested. The good news is there are ways you can help your loved ones avoid this step. Here are three ways you can ensure your estate doesn't pass through probate.
1. Joint ownership of property.
A common way for the surviving spouse of the deceased to automatically retain possession of the home, and other assets and real estate property, is by joint ownership. This can be done one of three ways, depending on certain factors:
- Joint tenancy with right of survivorship
- Tenancy by the entirety
- Community property with right of survivorship
The end result of each joint ownership method is the same: the property or other asset passes to the joint owner without being included in probate. However, one big difference is that joint tenancy with the right of survivorship can be used by married couples, unmarried couples, between parents and children, between friends, etc. The other two methods are limited to married couples or domestic partners in certain states.
2. Revocable living trusts.
Another method to help your heirs avoid probate is to use revocable living trusts. You do so by creating a trust agreement, which involves three different players:
- The trustmaker
- The trustee
- The beneficiary
When you create the revocable living trust, you fulfill the role of all three players. However, it is important that you name a successor trustee to manage the trust after your death, as well as the ultimate beneficiaries of the trust. You then fund the trust with whatever assets you choose - you can even designate the trust as the beneficiary for life insurance or investment accounts.
Once you pass away, the person you designated as the successor trustee will take control of the trust and see to it that your debts are paid in full. After that, they will distribute the amount remaining in the trust to your ultimate beneficiaries.
This method avoids probate because, once the assets are put into the revocable living trust, they are no longer owned in your own name. Therefore, they cannot be included in your estate that goes through probate.
3. Payable-on-death bank accounts.
A way to be sure the money in your bank accounts don't get tied up in probate is to designate them as "payable-on-death" accounts. You will simply fill out a form and put the person you want to get quick access to your bank account after you pass away.
This is different than making it a joint bank account, because you aren't giving the heir access to your bank account while you're alive. After your death, your designated heir just needs to take proof of their identity and a copy of your death certificate to the bank to gain access to the account.
However, you need to keep in mind that if you have a joint owner on the bank account, the person you designate as the beneficiary of the payable-on-death account won't gain access to the funds until after both owners have passed away.
For more information about the probate process, and how to avoid it if you wish, contact a firm like Leon J Teichner & Associates, P.C.Share