Probate can often be a long and expensive process, so it’s no wonder that people are wondering if they can avoid it. Thankfully, there are a few options available to help you bypass the probate process and make sure that your estate plan is handled quickly and efficiently. If you’re wondering “Can probate be avoided?” here are some answers to commonly asked questions.
What is probate?
Probate is the legal process for distributing a deceased person’s estate to their heirs. This process involves a court and a Personal Representative. The Personal Representative is in charge of inventorying the decedent’s assets, paying any necessary debts, and distributing the rest of the estate according to the terms of the will or state law. Because of this process, probate can often be time-consuming and costly.
How can I avoid probate?
Probate can often be avoided if the decedent has a comprehensive estate plan in place. Transferring property outside of probate is one way to avoid this process, such as establishing joint tenancy or transferring assets into a revocable living trust. Additionally, setting up pay-on-death and transfer-on-death accounts are also helpful ways to keep your assets out of probate. Establishing these types of accounts typically involves submitting a form to the financial institution with instructions on who should receive the funds upon your death.
1. Can probate be avoided with a living trust?
Yes. A properly drafted, properly funded revocable living trust will avoid probate. A living trust is a legal document that allows you to transfer your assets to a trust during your lifetime. When you pass away, your assets will be distributed according to the terms of the trust, which can help you avoid probate.
2. Will joint ownership avoid probate?
Yes. If you own property jointly with someone else, such as your spouse or a business partner, the property will automatically pass to the surviving owner when one of you passes away.
However, if you have multiple children or heirs, we do not recommend using joint ownership. If you name only one person to receive the asset, then you are not treating everyone fairly. And if you name all of the heirs on the asset as joint owners, then they are put in the awkward position of having to manage that asset together. This often results in probate litigation which is much worse than a simple probate would have been.
3. Can probate be avoided by designating beneficiaries?
Yes. Many assets, such as life insurance policies, retirement accounts, and bank accounts, allow you to designate beneficiaries. When you pass away, these assets will go directly to your designated beneficiaries, bypassing probate.
4. Can probate be avoided by making gifts?
Yes. You can give away assets during your lifetime to reduce the size of your estate and avoid probate. However, it’s important to be aware of the gift tax rules and to consult with a financial advisor or attorney.
5. Do estates with little value still go through probate? (Small estate procedures)
In some states, estates under a certain dollar amount can be settled through a simplified procedure, which can be faster and less expensive than probate court. For example, in Arizona if the personal property is worth less than $75,000 and equity in real property is less than $100,000. In that case, A.R.S. Section 14-3971 allows for transferring the asset by affidavit.
6. Can probate be avoided with pay-on-death and transfer-on-death designations?
Yes. Many states allow you to name beneficiaries for bank accounts, vehicles, and other assets by using payable-on-death or transfer-on-death designations. This means that the assets will pass directly to the beneficiaries you designate without going through probate.
The specific laws and regulations surrounding probate court vary by state. So it’s best to consult with a qualified attorney to determine the best options for your specific situation. (If you need help in Arizona, give us a call at 602-443-4888.)
How do I create an effective estate plan?
An effective estate plan should include a will, power of attorney documents, trusts, and any other relevant documents to ensure your wishes are followed. Make sure that you review your estate plan regularly to make any necessary updates. Additionally, setting up the right accounts will help avoid probate and keep your assets out of this process. Finally, an experienced estate planning attorney can help ensure that all the proper documentation is in order for establishing and maintaining an estate plan that works for you.
Are there alternatives to will-based estate planning?
Yes, there are alternatives to will-based estate planning. These include setting up joint accounts or titling assets in trusts. Depending on the state you live in, you may also be able to avoid probate by creating transfer on death (TOD) beneficiaries. TODs allow individuals to name who they want their property and/or assets to go to upon their death, while still maintaining control over them during their lifetime.
Do I need a lawyer to help set up my estate plan?
Estate planning can be complex and you may benefit from working with a lawyer or an estate-planning specialist to ensure your wishes are legally enforceable. An experienced lawyer familiar with the rules in your state can help construct an airtight estate plan that avoids probate and ensures your assets pass directly to the people you wish.
We can help you avoid probate and make sure your wishes are carried out. Call us at 602-443-4888 today. We’ve helped hundreds of people with wills and trusts since 2001. We will create customized documents for your unique situation.