In this article, we will explain a probate, it’s definition and avoiding probate. You will see terms such as probate will and probate court when researching this topic and just know that these are self explanatory terms.
If you are in a situation where you need clarification on legalities to a claim, then don’t let the legal jargon scare you. It’s really not that difficult to understand how a probate works.
Probate Definition
In short, a probate is basically a process conducted by legal means in which an estate is dispersed under the direction of a legal will. All claims to the estate are assessed as well as any disputes by an appointed court which will then determine whether the will is valid.
When someone sets out a will, they leave a specific set of instructions and a probate is used to interpret these, identifies the true executor of the estate before deciding who gets what and when.
Avoiding Probate
There are several ways to avoid part or full probate and it would be advisable to know what they are. If you have a fairly sizable estate including cash and property assets then this information is important. Here’s a checklist of ways of avoiding probate and you can check these with an estate planning attorney before you proceed.
- Establish a revocable living trust which means that in the event of you passing away, the trust won’t be counted as being part of your probate estate. After you pass away, the person you appointed trustee can then transfer items in the trust to the person/s you willed it to.
- If you have bank accounts or retirement planning accounts you wish to avoid probate on then simply change them to pay-on-death accounts. Sounds complicated but it’s not really and simply means that when you pass on, it will bypass probate and goes to the beneficiary you listed when you filled out the forms for the pay-on-death accounts. Check with your estate attorney as you may also be able to do the same with material property and real estate.
- If you are married or in a cohabitation relationship and either of you want your assets and cash transferred to the other upon your death, then you need to fill out and submit a joint ownership of property. If one of you passes on, because you specified on the form on how the title is being held, in this case, in favor of your partner, you can avoid probate. Type of property includes joint tenancy, tenancy by entirety and community property.
- When you gift your assets when you are alive probate will be avoided when you pass for the reason that you don’t own it. That’s simple enough and by reducing the size and value of your estate then the probate cost is also significantly reduced.
Reasons To Avoid Probate
When you are alive and creating an estate plan you’ll often hear the term probate court. You really want your loved ones to avoid this at all cost unless you have a masochistic streak.
Why?
Simply because a probate court will hold up distribution of your assets and bind them for several months, sometimes years. If you have a lot of accumulated wealth which you want your loved ones to have when you die then also know that probates can be expensive including fees for attorneys and courts and these can be as much as 5-10% of the value of the estate.