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Sudden Wealth Blog

Can Probate Be Avoided?

Family photos in a wooden box. Can probate be avoided?

Probate can often be a long and expensive process, so it’s no wonder that people want to 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?

Before we start, let’s talk about what probate even is. Probate is the legal process for distributing a deceased person’s property and assets to the people who are entitled to get those things. 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.

Can probate be avoided?

Yes. Some common methods to avoid probate include placing assets into a revocable living trust, joint ownership with right of survivorship, beneficiary designations, gifting, small estate procedures, and transfer on death deeds to real property. However, it’s important to be careful because these options can sometimes create problems.

Below is more information about these common ways of avoiding probate.

1. Using a living trust to avoid probate.

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 successor trustee will distribute your assets according to the terms of the trust and without the need for the probate court to get involved.

2. Using joint ownership to avoid probate.

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.

Types of joint ownership include:

  • Joint tenancy with right of survivorship
  • Community property with right of survivorship (in some states)

WARNING: If you have multiple children or heirs, be careful in 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. Using beneficiary designations to avoid probate.

Designating beneficiaries for certain assets allows them to transfer directly to the named beneficiaries without probate. This applies to:

  • Retirement accounts (e.g., IRAs, 401(k)s)
  • Life insurance policies

4. Giving assets away before you die.

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. 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. Pay-on-death and transfer-on-death designations?

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.

7. Transfer-on-Death Deeds.

Some states allow real estate to be transferred using a transfer-on-death (TOD) deed, which names a beneficiary who will receive the property upon the owner’s death, bypassing probate.

Arizona allows you to use a beneficiary deed to transfer real property (like a house) directly to the persons you name.

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.

 

ABOUT THE AUTHOR

Founding attorney Paul Deloughery has been an attorney since 1998, became a Certified Family Wealth Advisor. He is also the founder of Sudden Wealth Protection Law.

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