When you include assets in your will, they pass through probate after you die. This is a common and normal process for many estate assets. But there are some drawbacks about probate that you may want to avoid.
Probate can be costly, lengthy and public. If you want to benefit your heirs with a more private and affordable and faster process, you may want to shield some of your assets from the probate process. Consider some of the following methods for avoiding probate.
Revocable living trust
Placing assets in a trust means the property does not belong to your probate estate. This is because a trustee technically owns the property, not you personally. After you pass away, the trustee you name can quickly and easily distribute the property to your beneficiaries outside of probate. All you need to do is specify who you want to inherit the assets. Trusts also allow you to make specific stipulations about when to distribute property.
Joint property ownership
You can jointly own certain types of property with someone else. Joint tenancy means that, when one owner dies, the other will immediately own the property without any probate.
One simple way to pass some assets onto your heirs without probate is giving them as gifts while you are alive. If you do not own assets when you die, they will not go through probate. However, you must be mindful of avoiding the gift tax.
Many financial accounts act as POD accounts, which allow you to name someone to inherit the assets when you die. Most bank accounts, credit card accounts and retirement accounts are POD.
Probate is not always a bad thing. Additionally, it is not an all-or-nothing situation. Your estate will likely be partially subject to it, but you can make certain decisions to avoid as much of the probate process as possible.