Note: This topic has a great deal of depth to it; please consider this article a starting point.
In some cases, it may not be necessary to send a will through the probate process. While probate is the legal method of processing a will and its estate, it is not always the most efficient method of handling an estate. Understanding the alternatives to probate begins with understand just what probate is.
As a general rule, the probate process will perform several key functions on behalf of an estate and its heirs. These include:
- Providing proof to the court that the will provided is valid and belongs to the deceased and their estate
- Completing an accurate inventory of the assets owned by the deceased at the time of their death
- Engaging professionals to accurately appraise the value of real estate and other assets
- Repay any outstanding debts or taxes owed by the deceased or the estate
- Properly distributing the remaining assets of the estates to the legal beneficiary or heirs according to the terms of the will
In order to avoid probate, one of several options, or a combination, must be chosen and completed.
- Payable on Death: Also known as Transfer on Death Accounts, Payable on Death simply allows the deceased to set up, prior to death, a direct transfer of items such as investment or bank accounts directly to their chosen heir upon their death. These assets will not be subjected to the probate process. Other examples include 401K accounts, IRA’s and sometimes brokerage accounts.
- Joint Accounts: By setting up bank and investment accounts as ‘joint’ and ensuring that they have the designation “with right of survivorship,” the account automatically transfers to the survivor upon death of the other account holder. This process is simple and only requires a certified death certificate be shown to the bank or financial institution
- Joint Property: Much like joint accounts, by co-owning property, it is often possible to avoid probate. The determining factor is how the property in question is title. It is critical the property be designated as ”Owning Joint Property with Right of Survivorship.”
- Revocable Living Trust: A revocable living trust is a writing agreement that forms a trust that is then funded by the assets of the estate. The deceased, upon setting up the trust, becomes the ‘trust maker.” They can deposit assets into the trust as well as invest it. Upon their death, the trust passes to their heirs as a ‘living’ trust. The new trustee will have access to the trust and be able to use it as they see fit within the confines of the trust itself.
- Gifting: Assets or property that are ‘gifted’ prior to death do not need to be probated.
- Small Estates: Estates with a monetary value of less that $100,000 can typically be handled without the probate process
Each of these alternatives works in specific cases. Consult a qualified probate attorney to determine which is ideal for your particular estate and needs.