Avoid Probate with These Tools

When you’re grieving the loss of a loved one, the last thing you need is the stress of dealing with probate. Despite this, many people assume probate is a foregone conclusion. The truth is, there are a number of ways to avoid probate, ensuring peace of mind and comfort for your family long after you’re gone. Let’s take a look at the challenges associated with probate and the estate planning methods that can help you bypass them.

First, what is probate?

Probate is a legal process for administering your estate after you pass away. A probate court will identify and inventory your assets, use those assets to pay off any debts or taxes, and then distribute the remainder to your beneficiaries.  Ideally, this system ensures everyone’s interests are protected and transparency is preserved by making the proceedings a matter of public record.

Why should you avoid probate?

That said, probate has some major drawbacks, most notably the cost and time. Probate can be expensive—involving court fees, attorney fees, and potentially executor fees—reducing the value of your estate and what your beneficiaries inherit. Worse, the process could take months, or even years to complete. All the while, your assets will be frozen and inaccessible to your beneficiaries.

Further, having your probate proceedings appear in the public record may not be desirable for you or your family, especially if you value privacy. Probate makes information about a loved one’s assets and beneficiaries widely available, which can be a concern.

And last—but certainly not least—is the stress probate causes. Navigating the legal requirements of probate during an already emotionally difficult time can be draining. Not to mention that in addition to paperwork and legal notices, there’s the potential for disputes among family and friends. For many families, that alone is reason to seek out alternatives that will avoid probate and keep the peace.

How can you avoid probate?

Fortunately, estate planning offers a number of avenues to bypass probate. Among those options are:

Living Trusts: A living trust is a type of revocable trust, meaning it can be modified during your lifetime. Ownership of your assets, including property and bank accounts, can be placed into the trust. You continue to use and benefit from the assets until your death, at which point the assets will pass to your beneficiaries without the need for probate.

 Asset Protection Trusts: An asset protection trust can also pass assets and property onto your heirs without the need for probate. But one of the most notable differences is that it can shield your assets from long-term care costs if they’ve been in the trust for five years or more. Another important difference is that an asset protection trust is a type of irrevocable trust—meaning once it’s established, it can’t be changed or abolished.

Joint Ownership with Right of Survivorship: For specific assets—like a bank account or home—joint ownership with “right of survivorship” will bypass probate. You might have seen this abbreviated on a bank document as JTWROS (joint tenant with the right of survivorship). Simply put, it means the surviving owner will automatically inherit ownership of the asset.

Payable-on-Death (POD) and Transfer-on-Death (TOD) Designations: If you’ve ever designated a beneficiary on an investment or bank account, then you’re already familiar with this concept. These assets will also bypass probate.

Small Estate Administration: For Ohio estates below $35,000 (as of this writing), there’s also the option of a simplified process that is less costly than full probate. More on that here.

Finally, it’s important to note what’s not on this list, and that’s a will. Wills have to be validated by a judge, so if you only have a will, you’ll still be subject to the probate process. You may need some additional planning tools, like a trust. Our Estate Planning 101 series explains this further.

Ultimately, the best way to avoid probate is by working with an experienced team who will take the time to understand your needs and develop an estate plan that meets your goals. While many firms approach estate planning as a transactional relationship, at AlerStallings we’re with you for life. We offer lifetime support, complimentary meetings, and flat-fee pricing, to help you and your family confidently navigate whatever comes your way. Learn more about our estate planning services here, or contact us for a free consultation.