Aug242016How to Avoid ProbateOften, it issaid probate should be avoided. Understanding why you may want to avoid probate and how to avoid probateshould help you determine if avoiding probate should be one of your estateplanning goals. Defining the termprobate is a good place to start. Probate is a process that begins with filing a will with a court. The will becomes public and the court reviewsthe will to determine if it is valid or invalid. In some cases, the court extensivelyoversees the process of distributing assets which necessitates active attorneyparticipation. The extent of courtoversight and attorney participation goes down in a streamlined process nowavailable in most states called unsupervised probate. Even an abbreviatedprobate process may prove undesirable, and if so, there are ways to avoid theprobate system entirely. Here are some ofthose ways.Pay-on-Death (POD) or Transfer-on-Death(TOD) Accounts One way toavoid probate is to name one or more beneficiaries on your bank and brokerageaccounts. These instructions, sometimesknown as POD or TOD accounts, create a contractual agreement with the financialinstitution specifying to whom the account transfers upon your death. You create these instructions by completingdocuments provided by the institution for your signature in front of anotary. Upon your death, the institutiontransfers the assets to your designated recipient after the named recipientcompletes appropriate claim forms and presents a valid certificate of yourdeath. If you choose this option, it is helpful if you leave a documentdetailing the location of the TOD and POD accounts so your beneficiaries maycollect the assets.JointOwnership of Property or JWROSAnother wayto avoid probate is to title assets jointly with another person. When you own property jointly with anotherperson, the property passes entirely to your joint owner if they survive you. You may designate more than one joint owner,and if you specify all owners have rights of survivorship, the last survivingowner owns the full property. You createrights of survivorship in real property, in most states, by signing a deed infront a notary and recording the deed in the county where the property islocated. Rights of survivorship in bankaccounts and brokerage accounts arise when you complete documents provided bythe financial institution identifying your joint owner or owners. Sometimes, the financial institutionidentifies this type of account joint ownership with a “JWROS” notation. LifetimeGifts If you giveassets away before you die, there will be no need to probate those assetsbecause you don’t own them on your date of death. Assuming you are comfortable financially withgiving up part of your wealth before you die, gifts will help you avoid probate. Gifting properly during your lifetime mayalso minimize death taxes. Under currentfederal law, you may give away up to $14,000 per recipient per calendar yearand married couples may give away up to $28,000 per recipient per calendaryear, doubling the gift value. If statedeath tax laws apply, lifetime gifts may also prove helpful in reducing yourstate death tax costs.LivingTrustsThe mostcomplete way of avoiding probate is to create a living trust. You sign this document while you are aliveand change legal title of your assets from your individual name to the trusteeof your trust. Since you do notindividually own your assets, transfer of assets to your beneficiaries afteryour death does not require probate court proceedings. In most instances, youmay act as your own trustee and continue to use all of your assets for yourbenefit while you are living. Probate maybe avoided with proper planning and advice. To determine if your estate plan would benefit from using non-probatetransfer tools, please contact us for a consultation.