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One question that many people ask when contemplating their estate plan is how to avoid probate.
Probate is an expensive and time-consuming process that could significantly reduce what you leave to your heirs. While there may be some benefits of probating your estate -- like having court supervision and having the unwinding of your estate be in a very public forum -- the reality is that most people do not need these protections.
So how can you keep your estate out of probate?
Setting Up a Trust
When people think of avoiding probate, most think of setting up an inter vivos or living trust. With a living trust, you transfer your assets like your home, bank and savings accounts, vehicles, etc., into a trust, and name yourself as the trustee. This way you still have full control of all of your assets. In addition, you can name successor trustees and create a detailed set of trust instructions delineating what will happen to your assets after death.
If you properly set up a living trust, the bulk of your assets will be in the name of your trust. So when you die, these assets will avoid probate and pass according to your trust instructions. Just remember to draft a pourover will for any assets you forget to name into the trust. A pourover will addresses property not specifically named into the trust.
Joint Tenancies and Other Options
Besides creating a living trust, many people opt to own property in joint tenancy as a way to avoid probate. With joint tenancy, once one of the joint tenants dies, the deceased's share of the property automatically passes to the other joint tenant without the need for probate. Oftentimes spouses will name themselves joint tenants over real estate.
Other ways to avoid probate can include starting a life insurance policy and naming beneficiaries for your retirement assets. In both of these cases, your property will pass to named beneficiaries in the policies without having to go through probate.
These are just some of the common ways to avoid probate of your estate. Remember, there are benefits to probate, and avoiding probate should not be an estate planning goal in and of itself. Also, know that it can be very complicated to establish some of these probate-avoiding devices. You may want to contact an experienced estate planning attorney to help you with your specific goals.