When planning wishes for an estate, many people aim to avoid the probate process on their passing. Probate can be stressful for family members and it can drag out for months or years, lowering the value of your estate overall. There are steps you can take now to stop this from happening.
The main concept behind avoiding probate is to take assets out of your estate or appoint a new owner over them so that they do not need to be distributed in other ways. It is smart to consult an estate planning attorney about your situation, but here is an overview of your options:
1. Set up a living trust.
A revocable living trust allows you to transfer ownership of your property to another person and lay out your wishes for how it is used. The downside is that you need to keep some of your property to sustain yourself, but any assets transferred through a living trust avoid the probate process completely.
You can give instructions on how the trust should be used after you pass, so choose a trustee that is reliable and will respect your wishes.
2. Give joint ownership of property.
Another option is to set up a “right of survivorship” for your property. What this means is that you choose a joint tenant to automatically receive full ownership of the property upon your passing. Because the property will still have an owner, it will not need to pass through probate.
You can set up joint ownership for many assets, such as savings and investment accounts. There are additional joint ownership options for married couples if you want your spouse to be the joint owner.
3. Appoint a beneficiary of your accounts.
Most retirement accounts, such as a 401k, explicitly give you an option to choose a beneficiary. However, you can also choose to appoint a beneficiary for your other accounts, like your bank accounts. You can set up a “payable on death account” or a “transfer on death,” meaning you have full ownership during your lifetime to continue using your accounts and assets but they will automatically pass to a person of your choosing when you pass away.
As with a living trust, make sure you choose someone who will respect your wishes for these assets.