Probate versus probate avoidance

There are two commonly used strategies in estate planning, probate versus probate avoidance.  Each has advantages and disadvantages like anything else.

Probate

Simply put, probate is the way that a person’s estate – their stuff – passes to their heirs.  Probate is used to transfer title to any assets you own at the time of your death that are solely in your name and did not pass to someone else by operation of law.

If the person who died left a valid Will, a probate court accepts the Will. The executor then has the authority to go about the business of settling the estate. The court doesn’t have to do much, because the Will and other estate plan documents tell the executor what to do.

The probate court is even more involved if the person who died did not leave a valid Will. The court will appoint an administrator to settle the estate. Without the guidance of a Will, however, the administration of the estate is much more frustrating, time-consuming, and costly.

Either way, probate is a public proceeding and can take several months or years.  Because it is a court proceeding, probate often results in family fights.  Sometimes, the animosity created by these fights lasts forever.

Probate Avoidance

Many people find that probate is too time consuming, costly and want to avoid the potential for family discord.  Fortunately, we have estate planning tools that help people avoid probate.

Revocable Living Trust. A revocable living trust can help you avoid guardianship and probate, while protecting the assets for your spouse or children.  Because the assets in the trust are not owned “solely in your name” at your death, they avoid probate.  If you become disabled, a successor trustee named in the trust takes over management of the trust assets. Upon your death, the assets pass as stated in the trust document. In other words, they could go straight to your beneficiaries or into another trust.

Joint Tenancy & Tenancy by the Entirety. One way to quickly transfer assets to an heir without the need for probate is by making the heir a joint owner or “joint tenant with right of survivorship.” You often see this with the marital home.  Couples typically own their homes jointly with a right of survivorship.  This method of avoiding probate does have some pitfalls. For example, the assets may be vulnerable to your co-owner’s creditors. Additionally, there can be significant tax consequences if you transfer or change title to assets during your lifetime. Using the right trust avoids these tax consequences.

Beneficiary Designations. You can add Transfer on Death (TOD) or Pay on Death (POD) beneficiary designations to your financial accounts. Upon your death, the funds in those account are passed to the beneficiaries immediately. No probate court action needed!

Let Us Help You.
Ultimately the probate versus probate avoidance is your choice to make.  We can help you design a plan that involves probate.  If you prefer, we can help you with strategic estate planning to help your heirs avoid a lengthy probate proceeding. At Adams & Miller, P.C., we thoughtfully evaluate our client’s needs, then craft estate plans that include the best options. Call us at 256-237-3339 or use our Contact Form  to let us know you’re ready to develop your estate plan.

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