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By Simon Volkov
Probate is the legal process that requires property belonging to an individual who is deceased be accounted for and properly distributed to heirs. The main objective of Probate is to ensure the decedent’s wishes are met and that creditor claims, tax liens and outstanding debts are paid in full.
Probate is governed by county and state Probate Courts and laws vary from state to state. Many people believe if they file a Last Will and Testament, their estate will not have to pass through Probate; however, this is not the case.
In order to keep your estate out of probate, you must draft a revocable living trust. Legal title to your property is transferred into the trust and administered by a Trustee. You can designate yourself or someone else as the Trustee. If you designate another individual as the Trustee, s/he does not have access to your property until you die.
A revocable living trust allows you to specify who you want to inherit your belongings. All property held in the trust avoids probate because it is not considered part of your estate. In the event of your death, the Trustee can easily distribute property to designated beneficiaries.
You can keep bank accounts out of probate by setting them up as Payable-on-Death (POD) accounts. This is a simple process and consists of filling out a form provided by the bank. You can record the name of the person you want to inherit the money in your accounts. Typically, spousal joint bank accounts automatically are transferred to the surviving spouse and are not required to pass through probate. However, to be on the safe side file a paid-on-death form with the bank, assigning your spouse as the beneficiary.
Keep automobiles out of probate by designating a Transfer-on-Death beneficiary. Similar to the POD bank account, the designated beneficiary will assume ownership of your vehicle in the event of your death. Not all states allow transfer-on-death benefits. Therefore, you will need to inquire with your state’s Department of Motor Vehicles or visit their website to determine if they allow TOD benefits.
Perhaps the easiest, yet least common way to keep your estate out of probate is to simply give away your property and belongings while you are still alive. Oftentimes, people diagnosed with terminal illness elect to give valuables to their loved ones. Elderly individuals will sign over the title to their home or car and gift it to their children, spouse or siblings.
By giving away real estate, automobiles and other valuables prior to your death, you will reduce the size of your estate and lower costs associated with the probate process. It’s important to note that you can give away property at any time in your life. However, if your gifts exceed more than $12,000 to any one individual during a calendar year, you will be required to file a federal gift tax return.
These are just a few ways to keep your estate out of probate. Depending on the size and value of your estate, there may be other options to further protect your assets and avoid probate. It’s wise to consult with a professional who specializes in Probate Law and Inheritance Tax. By setting up a revocable living trust and taking steps to keep your estate out of probate, you’ll save your loved ones a tremendous amount of stress and emotional turmoil.
About the Author: Simon Volkov is a private real estate note investor who specializes in helping individuals liquidate their assets. From forthcoming Inheritance windfalls to
Probate
, Simon Volkov offers a host of solutions for those in need of cash. Learn more about probate by visiting
SimonVolkov.com
.
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