3 Ways to Avoid Probate
November 7, 2023
The probate process, while necessary in many cases, can sometimes be a prolonged, complex, and costly affair. It’s no wonder that many people seek ways to avoid it. At Bingham Legal Group, with our foundation built on more than 60 years of experience, we’ve guided countless clients through these very decisions. Here, we’ll explore three proven strategies to help you avoid probate.
Revocable Living Trusts stand out due to their effectiveness in avoiding probate. They act as legal entities you create to house and manage your assets. When setting up such a trust, you’ll transfer your assets into its name, effectively changing the ownership from you to the trust. This, however, doesn’t strip you of control. Throughout your lifetime, as the trust’s trustee, you’re empowered to manage, sell, or use these assets as you see fit.
Additionally, you select a successor trustee who assumes responsibility for the assets upon your incapacitation or death, ensuring their distribution is in alignment with the trust’s specifications.
One notable benefit of Revocable Living Trusts is their adaptability. Because these assets bypass the probate process by being under the trust’s name during your passing, it offers a streamlined transition. Also, the “revocable” aspect underscores your ability to amend or terminate the trust at your discretion during your lifetime.
Joint ownership embodies the concept of shared ownership, where assets belong to two or more people. This strategy is frequently used to ensure assets bypass the probate process.
Two main forms dominate this category: Joint Tenancy with Right of Survivorship and Tenancy by the Entirety, with the latter often reserved for married couples. Both these setups grant each owner an equivalent stake and right over the asset.
A defining characteristic of joint ownership is the immediate transition of asset ownership upon the death of one co-owner. The asset’s ownership seamlessly shifts to the surviving owner or owners, nullifying the need for probate. However, it’s important to tread this path with caution. The automatic transition upon death requires trust in your co-owners.
Some assets offer the privilege of naming a beneficiary, ensuring they transition directly to the designated person upon the owner’s demise, negating probate. This category includes life insurance policies, retirement portfolios like IRAs and 401(k)s, and certain bank and investment accounts.
The nature of this arrangement is the direct transfer of the asset to the named beneficiary, devoid of probate formalities, upon the owner’s death. This approach is widely used for its simplicity and expediency, guaranteeing that assets find their way promptly to the intended recipients.
However, it’s necessary to routinely revisit and, if necessary, update beneficiary designations, particularly in the wake of significant life milestones such as marriages, divorces, or the arrival of offspring.
Avoiding probate can expedite the distribution of assets and potentially reduce legal and court fees. However, you need a strategy that aligns with your unique financial situation, goals, and family dynamics. At Bingham Legal Group, our rich history, built on over six decades of experience, positions us to offer insights and guidance tailored to your needs.
If you’re contemplating probate avoidance or need advice on estate planning, reach out to our team online or call (248) 594-1919. We’re here to light the way.