As many of you may know, the probate process is public and can be costly. That being said, there are a few ways in which one can plan to avoid probate. Here are a few of the most common:
1. Create a Living Trust. While you are alive, you can create a trust and name a trustee to administer your assets after you have passed away. To do so, you have to be sure that the trust is properly funded – this means that after creating a trust, you must be sure that proper trust assets have been re-titled into the name of your trust.
2. Name a pay-on-death beneficiary. With many financial accounts, you can designate a beneficiary that will be entitled to the proceeds following your passing. Under most circumstances, a beneficiary is immediately entitled to payment once the account holder is notified of death. In years past, this was commonly an option with retirement accounts, but has become more popular with standard bank accounts.
3. Hold assets jointly. In most cases, if you hold an account or other asset jointly with someone else, the asset will immediately pass to the survivor upon death.
As you may have noticed above, I used qualifying language such as “in most cases” or “with many accounts” in describing probate avoidance options. This is because there are many exceptions, limitations, positives and negatives associated with pursuing the options above.