Effective Strategies for Avoiding Probate and Streamlining Your Estate Plan

Probate is the legal process by which an estate is distributed according to the wishes expressed in a decedent’s will or, in the absence of a will, according to intestate succession law. Ideally, the probate process provides for court oversight to prevent fraud, theft, or abuse of the estate assets. However, because probate can become a long, expensive, and public process, people with property to pass on often seek ways to avoid probate. Existing law has accommodated them by creating several exceptions that allow distribution of assets outside of the probate process.

For example, property held by right of survivorship in joint tenancy or as community property passes directly to the surviving joint tenant or spouse without going through probate. In addition, property may be held in bank accounts that allow money to be “payable-on-death” (POD), or certain assets may be registered to “transfer-on-death” (TOD). Similarly, existing law allows a person to place both real and personal property in a “living trust” that designates beneficiaries and the manner of distribution by the terms of the trust instrument, rendering probate unnecessary. A person may also invest assets in insurance policies, IRAs, 401Ks, or other estate planning devices that allow assets to automatically transfer to a designated beneficiary outside of the probate process.

However, the mere existence of these laws is not enough to protect you from the onerous probate process. It is very important that you take advantage of these probate-avoidance mechanisms through the following actions:

Create your living trust. This remains the best and most comprehensive way to avoid probate. Once created, fund your living trust by titling real and personal property in the name of the trust or by having the trust be a POD or TOD beneficiary of your assets.

In the absence of a trust, consider owning title to real and/or personal property as “joint tenants with right of survivorship” or “community property.”

For accounts with banks and financial institutions, make sure they are either titled in the name of your trust or, alternatively, have the trust or specifically-named individuals as the POD or TOD beneficiaries.

For assets like annuities, life insurance policies, IRAs, and 401Ks, properly designate your primary and contingent beneficiaries. Even automobiles can be titled in ways such as “and”, “and/or”, and “or” for co-owners, as community property, or “transfer-on-death” to someone else.

Nicolai Law Firm can assist you with any matters or questions involving the many intricacies of estate planning and property ownership.

*** Information contained in this Memo is intended for informational and educational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney. It is likely considered advertising. ***