As most probate lawyers will tell you, unless you have your estate planning attorney prepare a living trust, there are very few ways to actually avoid probate altogether. Probate is the legal process by which the courts oversee the distribution of your assets as outlined in the instructions in your will. However if you leave no will, the estate will also go through probate. If this sounds paradoxical, read on!
The reasons to avoid probate are numerous and mostly relate to financial considerations; when Elvis Presley died in 1977, his estate was valued at some $10 million. By the time the courts and probate lawyers finished taking their cut, there was less than $3 million left to his heirs. Proper estate planning can be crucial in avoiding this type of probate fees. While probate and wills are necessary evils in our modern-day society, there are things you can do to avoid probate.
Where’s There’s a Will….There are Probate Lawyers
Probate lawyers are generally not averse to the expense and time involved in distributing an estate. Probate can take over a year (the average is 13 months) and cost literally tens of thousands—or even millions, depending on the size of your estate—in court costs and probate attorney fees.
Once your estate is probated, all of your assets become public record, so if you are inclined to want to keep your financial affairs private, then you will also want to avoid probate lawyers. Generally speaking, your estate must be probated if it has a value of over $100,000, or if it contains land, houses or building which are valued at $30,000 or more. There are a few estates which will fall below this statutory threshold and avoid probate, but they tend to be few and far between.
Specific Ways you Can Avoid Probate Lawyers—and Probate
There are only a few ways to avoid probate lawyers and probate entirely, but you must have some savvy estate planning in place—before you need it.
Should you have your attorney create a proper Living Trust, then once you pass away, the legal title to your assets simply pass to the named trustee who will manage the property for the benefit of your beneficiaries.
Make sure your insurance policies have a named beneficiary, as well as a contingency beneficiary in the case of death of the primary beneficiary. If you have named a beneficiary in your life insurance policy, then it is considered self-proving, and passes directly to your heirs without the necessity of probate.
Retirement plans are much like life insurance policies—if you make sure you have a named beneficiary, then the probate lawyers will not be able to touch the money in your retirement fund. Aside from this obvious benefit, making the maximum contributions to your retirement funds can minimize taxes, provide for your retirement and avoid probate lawyers—a definite win-win situation!
Ensure your property is either held in joint title or community property with rights of survivorship. This means that when you die, the full interest in the property belongs to your surviving spouse, or co-owner on the joint title without the necessity of probate.
Jointly held bank accounts also pass to the survivor, or you can set up what is known as a Totten Trust, which transfers the balance in your bank account to a named beneficiary upon your death—with no probate lawyers involved. You can also set up accounts as Payable Upon Death accounts; the account is in your name, with your intended heir’s name, POD. Upon proof of your death, the account is transferred directly to the named POD, without probating.
Give your assets to your heirs while you are still alive. This tactic gives you the benefit of being able to see your children and grandchildren enjoy some of what you intend to leave them while you are still alive. As of 2010 you could make up to a $12,000 tax free gift per person to as many people as you choose.
If your goal is to avoid probate lawyers, then make a concerted effort now to do some solid estate planning. Make sure you get good advice, then follow through with the legal paperwork to back it up.
