Probate is the court-supervised process of settling a person’s estate after death. While it serves a legal function, a lot of families do not appreciate the inherent delays it can cause and the all-too-public nature of the proceedings. For many families, probate can be a stressful and time-consuming experience – especially during a period of grief.
With proper estate planning, however, it is possible to reduce (or even eliminate) the need for probate. If you want to make things easier for your heirs, here are several strategies that can help you engineer a smoother, more private transfer of your assets to your loved ones.
1. Revocable living trusts
A revocable living trust allows you to put your assets into a trust while still keeping full control over them during your lifetime. After your death, the assets will then be managed and distributed by a successor trustee according to your instructions – without going through probate.
This not only maintains your family’s privacy by avoiding public court proceedings and allows for faster asset distribution, but also can be used to plan for the management of those assets if you are ever incapacitated prior to your death.
2. Payable-on-death designations
You can name beneficiaries directly on certain accounts and assets, such as bank accounts, brokerage accounts and even vehicles. These are simple to establish (and, if necessary, change) and the assets will completely bypass probate when they transfer directly to the named party.
3. Joint ownership with rights of survivorship
Properly titled property held jointly with another person – such as a spouse or adult child – will generally pass directly to the surviving co-owner upon your death. This is commonly used with joint bank accounts, vehicles, investment accounts and even real estate. However, it’s important to weigh the risks of this particular plan, since the asset may be exposed to claims by the co-owner’s creditors or affect your Medicaid eligibility.
4. Beneficiary designations
Life insurance policies, retirement accounts – like IRAs and 401(k)s – and other annuities generally allow you to name one or more beneficiaries to receive any proceeds upon your death. Keeping the beneficiary designations current is a simple but powerful way to make sure your assets reach the intended recipients without probate delays.
5. Transfer-on-death (TOD) deeds
New York does allow you to use a transfer-on-death deed to name a beneficiary for your real estate. This tool allows you to retain full ownership during your lifetime while setting things up so that the property passes automatically to your named beneficiary upon your death. Many property owners find this superior to joint ownership with a right of survivorship because it does not give the other party any ownership interest so long as the grantor is alive.
Probate avoidance is not about cutting corners, evading the law or skirting any responsibility – it’s about making thoughtful decisions in advance to reduce complications and stress for your family after you are gone. The right approach depends on your unique circumstances and goals, and a tailored approach to your estate planning with experienced legal guidance can make sure that your plans are solid and reflective of your values.
