3 Ways You Can Make Sure Your Loved Ones Avoid Probate

When the time comes for you to pass away, the last thing you want your loved ones to go through is probate. Probate is what a person's estate must go through in order to prove the validity of the will. Probate can take weeks, or even years if a will is heavily contested. However, if there are certain aspects of your estate that you don't want to be tied up in probate, you can take certain steps to ensure they are not included. Here are three ways you can make sure your loved ones avoid probate after you pass away.

1. Put assets into a revocable living trust.

A revocable living trust is a good way to help your loved ones avoid probate after you die. You simply set up the trust and fund it with the money and assets you choose. You will be the Trustmaker, the Trustee, and the beneficiary when you first set it up.

You will designate a successor Trustee who will immediately take control of the trust once you pass away. They will be able to pay any outstanding debts with the money in the trust and then give the remaining amount in the trust to the ultimate beneficiary or beneficiaries you named when you created the trust.

The money and assets in the revocable living trust don't have to go through probate like the rest of your estate because they are no longer part of it. Instead, the money and assets are owned by the revocable living trust. 

2. Putting property under a joint tenancy - either tenancy by the entirety or joint tenancy with right of survivorship.

Another way you can help your loved ones avoid probate is to designate property under a joint tenancy. This will allow your loved one to either retain their ownership of the property after you pass away or enable them to remain in the home until they pass away or decide to leave of their own accord. 

Tenancy by the entirety is the type of joint tenancy that married couples use. In this case, ownership of the property doesn't pass to the surviving spouse because he or she already owns the property. Since one of the spouses is still living, the property doesn't go through probate.

Joint tenancy with right of survivorship is a common way to do joint tenancy between two unmarried people. Each party listed has equal shares in owning the property. When one of them passes away, their share passes down to the other joint tenant. This avoids probate because the surviving owner now owns 100% of the property.

3. Designating your bank account as a pay-on-death account.

If you want to make sure your bank accounts don't end up in probate, you need to designate them as pay-on-death accounts. You can put anyone you choose as the beneficiary. Having a pay-on-death bank account enables the money in the account to skip probate, and your beneficiary will be able to collect the money as soon as they get a copy of your death certificate.

You need to be sure to check the laws in your state regarding spouses and pay-on-death accounts. In some cases, your spouse may have automatic rights to half of the bank account, which would cause problems for your beneficiary. One way around this is to get your spouse's written consent to leave the entirety of the bank account balance to your named beneficiary.

For more information about estate laws, visit Price & Associates.