While probate is meant to streamline the division of assets and property, it is not a perfect process. It is always helpful to try to avoid probate, as this process can be costly due to estate taxes and court costs. Probate can also be quite daunting and time-consuming. 

What Is the Purpose of Probate?

Probate is the term for a judicial process of administering a person's estate after their death. It calls for paying off debts, gathering all assets, and distributing any remaining assets according to an estate plan and the law.

Best Ways to Avoid Probate 

Here are three best ways to avoid the probate process:

1.Making A Living Trust 

A trust is a legal entity created by a trustor that allows a trustee to manage the trustor's property or assets for the benefit of a beneficiary. The trustor is still alive when the agreement is made. This agreement allows the trustor to benefit from the trust during their lifetime. It passes their assets onto the beneficiary when they die. It specifies a named trustee who will look after the estate and divide the assets. The trustee will also oversee all funeral costs and pay any debts through the trust. Living trusts can be either revocable or irrevocable. 

2.Having Joint Property Ownership

Joint property ownership means that more than one person owns a piece of property. A few types of joint property ownership are:

• Joint Tenancy: This type of property ownership works well with married couples. When one spouse dies, the other inherits the property without probate.

• Community Property: It is a type of joint ownership of assets between married couples. If the property is jointly owned with the right to survivorship, it automatically passes to the other spouse when one of the spouses passes away without probate.
  
  

3.Naming Beneficiaries on Specific Accounts

Another way to avoid probate is to name beneficiaries on specific accounts. It is beneficial for those who do not own property or do not have a significant amount of assets to include in a living will.

Here are several types of accounts that allow a person to name a beneficiary when they are created, often in the forms of "transfer upon death" or "payable on death" beneficiary assignments:

• Retirement plans

• Bank accounts

• IRA accounts

• 401k plans

• Stocks and bonds

• Life insurance policies

• Real estate ownership

Naming a beneficiary must be done proactively. Many accounts automatically assign spouses as the designated beneficiary. However, make sure that the spouse is the beneficiary. If you do not have a spouse or do not want them to be the beneficiary, some paperwork will be required to assign the desired beneficiary.

Other Possible Ways to Avoid Probate

There are various ways to avoid probate for some of your property or assets. One main way to do this is by giving a gift to a beneficiary. They can give a piece of property or gift money to beneficiaries to avoid probate before they die. Another way to avoid probate is to use a simple affidavit to claim the assets, property, or estate. It is only for small estates. It allows heirs to skip the probate process. They fill out a short form and then must wait 40 days. If there are no objections, the assets are passed on, and the estate is closed.

Takeaway

What will work for you depends on your financial situation and family dynamics. It brings peace to you and your loved ones during a difficult time if you use one or more ways to avoid probate. The probate process can be expensive. So, you save money by avoiding it. The best way to avoid probate is to make a revocable living trust and fund it with all your assets. 

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