How to Avoid Probate
Understanding why avoiding probate is important can help you ensure your estate is managed smoothly and efficiently.
You’ve heard it’s a good idea to avoid probate. But do you really know why? Most people have a false sense of security that since they have a will, all of their affairs are in order and won’t involve a court after they pass away.
Not true! A last will and testament is only effective if administered through probate court. Probate takes a great deal of time and money. The process could take a year or more and can create added stress to your heirs.
The good news is avoiding probate doesn’t have to be difficult. There are simple and effective ways to ensure that all of your property passes directly to your heirs. Keep reading to learn more about how to avoid probate.
Creating a trust means you put someone in charge of your assets upon death to distribute to members of your family, friends, and/or charities based on your wishes. You can appoint anyone to be the trustee (also known as administrator) of your trust when you die. However, we strongly advise appointing someone you trust with your life (literally) to be the trustee of your trust. So, a family member, close friend, or even an attorney or accountant.
A revocable living trust is created when the person or persons creating the trust are the sole beneficiaries during their lifetime. The creator reserves the right to revoke it or make changes. The person creating the trust usually chooses to also serve as their own trustee and remain in charge until they are no longer able to do so, such as if their cognitive abilities or physical health declines to the point where they are not able to function normally in day-to-day tasks.
Any assets properly held in the trust or transferred upon death to the trust will avoid probate and pass to the named beneficiaries as set out in the terms of the trust.
Additionally, to avoid probate, you must transfer assets upon the death of the owner to someone (or to a trust). Transfers of assets can be set up to take effect only at the death of the owner and either work in conjunction with a trust or operate outside of any will or trust created by that person.
One way to accomplish this comes from joint ownership of an asset with another person. When one of the owners dies, the property automatically goes to the other joint owner, with no probate involved. Naming beneficiaries on CDs, life insurance, and investment accounts will properly transfer those assets to the persons you have named.
Other examples of these legal documents include a beneficiary deed (for real estate), payable on death (added to bank accounts), and transfer on death (DMV uses to transfer vehicle titles). The biggest downside to using transfers on death for probate avoidance is that if the person you name dies before you do, your assets will no longer avoid probate.
In the state of Missouri, if you have children, your spouse isn’t your sole heir. If you want your surviving spouse to automatically be the owner of an asset, then it is important to own it with them jointly or leave it to them in your will or trust.
At our law firm, we can help you understand the difference between a will and a trust and how to properly title assets to help plan for the future of your estate. We will work with you and help you achieve peace of mind knowing how to structure your assets and avoid probate.
Please call our office at (888) 887-4170 if you have any questions or want to consult with one of our attorneys.
Understanding why avoiding probate is important can help you ensure your estate is managed smoothly and efficiently.
