Probate processes are costly, extensive, and time-consuming. The entire probate process is very public, which often makes it difficult to maintain the deceased’s privacy and assets.
Here are a few ways for you to avoid probate:
Put your estate in a revocable living trust.
The purpose of a living trust is to let individuals hold on to their properties till their death and make an end-run around the probate process. You get to avoid the probate process because the trust property isn’t a part of the probate estate.
It’s only considered a part of the estate for federal tax purposes. This is because you’re not the owner of the trust property—the trustee is. The property automatically transfers to your beneficiaries after your death. The trustee ensures the transfer—all you need to specify in the document who you want the property to go to.
Joint ownership of property makes it very easy to avoid probate after one of the owners dies. When one of the owners dies, the property automatically transfers to the second joint owner. There are no additional documents needed. There are three ways to make this happen:
- Create a joint tenancy with the rights of survivorship. This way, it will automatically pass on to the surviving owner without any probate.
- Create a tenancy by the entirety. This is much similar to joint tenancy. The only difference is that it applies to married couples or same-sex couples who are registered with the state.
- Create a community property with survivorship rights. Let’s say you’re married in California, and you and your better half are registered with the state as domestic partners. If you own property in another state (such as Arizona, Nevada, Wisconsin, or Texas) and own the property with your partner, you need this type of transfer will help you avoid probate. The rest of the provisions work the same way as that in a joint tenancy.
If you give away any property that you own during your life as a gift, it doesn’t go through probate after your death. It doesn’t go through probate simply because you don’t own it at the time of your death. Most gifts aren’t even subject to federal taxes.