How can I avoid probate?

For many people, the words “probate” or “probate court” conjure an image of bureaucracy, costs and wasted time. In some cases, that image is not too far from reality. But in other cases, and especially with the assistance of an experienced probate and estate planning attorney, probate can be a relatively low-cost and even efficient way of ensuring that property is properly distributed to beneficiaries in accordance with a decedent’s wishes and the law.

Before answering the question of “how can I avoid probate?” it may be better to ask questions like “how do I want my property distributed after my death?” and “how will my heirs or beneficiaries take ownership of my property when I’m no longer available to give it to them directly?”

Do I need a will?

A will can be thought of as a listing of a decedent’s wishes about the disposition of their property after they’ve died. But it may be more accurate to think of a will as a set of instructions to a person who will take the place of the decedent, legally, when it comes to matters like paying the decedent’s final debts and distributing their property. That’s why wills typically nominate someone to act as the decedent’s stand-in (this person used to be called an “executor” but is today called a “personal representative”) and contain provisions for paying funeral costs and expenses from a final illness.

Wills must be probated to have legal effect, meaning that a probate estate will have to be opened for the decedent and the will “admitted to probate.” For someone to control the distribution of their property after they’ve died through a will, therefore, means that probate cannot be avoided.

But a will and probate is not the only instrument available for controlling the distribution of your property after you’re gone. Other options include revocable trusts, beneficiary designations, joint ownership, lady bird (enhanced life estate) deeds, making gifts while you’re still alive, or even intestacy, i.e. distribution of property according to legal standards without considering the decedent’s wishes.

How do YOU want your property distributed?

“Property” means a lot of things and includes tangible personal property (things like furniture, personal possessions and vehicles), real property (land and buildings), financial accounts (like deposit bank accounts or retirement funds), intellectual property (copyrights and trademarks) and even things like the right to sue for damages done to you.

The first thing you should do when considering an estate plan is to inventory the property you own and consider how each type of property should be distributed. Tangible personal property, for example, is not typically very valuable and can usually be distributed informally and without much hassle. If, however, there is a lot of valuable, tangible personal property, or if two or more heirs want the same items, trouble can develop and either a will or a revocable trust may be your best bet.

Real property can often be distributed easily through what’s called a lady bird deed. With a lady bird deed, the person in possession of the real property stays in possession and even reserves for themselves the right to sell the property if they choose during their lifetime. If, however, that person dies without selling the property, the property transfers automatically to the grantee on the deed. In that way, the recipient of the property has no need to probate anything, but simply takes possession by operation of law (although recording the previous owner’s death certificate with a register of deeds will be necessary to obtain “marketable” title).

Joint ownership and beneficiary designations can accomplish many of the same things in terms of transferring ownership by operation of law without needing to involve probate. Both real property and, in most cases, financial accounts can be owned “jointly,” meaning by two or more people equally. When one of the joint owners of the property dies, their share automatically becomes the property of the other(s). Similarly, a beneficiary of a financial account through a transfer-on-death (TOD) or payable-on-death (POD) designation automatically becomes the owner of the property when the original owner dies. Again, rather than having to go to the time, trouble and expense of probate, a beneficiary should only need to provide the bank or financial institution a copy of a death certificate.

So… Do I need a will? How can I avoid probate?

How can I avoid probate? Do I need a will? The simple answer is: it depends. Everyone is unique and so is the nature of their property. The most important thing to do is to make a plan that considers what you own and how you want it to be distributed after you’ve died. Sometimes that plan should include a will, and sometimes it’s just not necessary. As experienced estate planning professionals, we’ve dealt with a range of estate planning needs from relatively simple transfers of small assets to large estates with varied portfolios of property. To discuss your unique situation, call or contact Noud & Noud today!