Quick Guide for Avoiding Probate
Avoiding probate can have its own pros and cons, but there are many reasons why people might reach such a decision. The probate process is usually extremely stressful if a will isn’t laid out methodically, and the probate process is sometimes extremely stressful for the family. Avoiding probate comes with its own costs, but it may save people money. Apart from saving time and having the assets distributed without delay, avoid probate can also protect your privacy. Through probate, your estate and will are open to the public.
How to Avoid Probate
There are different measures on how to avoid probate, but the only true way in avoiding probate includes a person arranging their assets so that everything in their name is automatically passed down to someone else. All of the following options include measures on how to avoid probate.
A joint tenancy allows a person to title their assets in another person’s name as well. For example, a husband or wife may decide to title their assets in the name of their spouse. If one spouse dies, the estate automatically passes to the surviving owner. There are some downsides to this step on how to avoid probate, however.
This measure usually has bad tax consequences, and the inheritance is usually seen as a taxable gift if the estate isn’t handed down to the spouse. Also, this measure on avoiding probate makes it hard to deal with the estate in the future.
This may be an option on how to avoid probate. This measure is somewhat similar to joint tenancies, but the estate is instead passed down to several individuals and organizations called remaindermen. There are many problems in avoid probate with this measure.
Not all remaindermen can acquire their share of the estate at the same time. This measure often creates conflict between the remaindermen and the life tenants as well, and if the property is being sold, multiple people acquiring the estate may disagree about the property’s worth. It’s safe to say that many people don’t decide to pursue this option as a step on how to avoid probate.
This step for avoiding probate allows you to list those people who will receive benefits at the time of your death. This kind of measure is usually used for life insurance policies, retirement plans, and IRAs. However, there is one major downfall to this measure. Because a beneficiary cannot receive the assets until the time of your death, they have no access to the estate before your death.
When considering how to avoid probate, the majority of people choose a living trust. A living trust allows a party to hold property for someone else, and there are three people parties involved in this process: the grantor (who transfers the property to the trustee), the trustee (who is responsible for using the property for the benefit of the beneficiary), and the beneficiary (who holds the beneficial title to the property). A living trust provides economic means to the grantor during his or her life, to the grantor’s spouse after his or her death, and serves as a tool to distribute assets to the children after the death of a spouse.