The property that someone accumulates contributes to their standard of living and their personal wealth. When they eventually die, those assets become the property of their estate. The personal representative overseeing the probate process distributes their property in accordance with their written instructions or state law.
One of the reasons people establish estate plans is a desire to minimize probate proceedings. Many testators aspire to keep their most valuable property out of the probate courts. What are some of the ways to minimize resources that will require probate oversight after someone dies?
Changing ownership of those assets
The simplest way to bypass probate proceedings is to change the ownership of an asset while the owner is still alive. They can add their intended beneficiary as a co-owner. Doing so may require a deed or other legal documents. Assets owned jointly by two or more people are not the sole property of the person who dies and typically do not have to pass through probate court. There are ways to arrange for the one person’s interest in the property to transfer to the other party at the time of their death.
Leaving special instructions with businesses
When someone owns financial resources, they have the option of making arrangements to transfer those assets prior to their death. Instead of giving a child or spouse direct access to an account while the owner is still alive, it is also possible to arrange for a certain person to take control of an account after the main account holder dies. People who file transfer on death paperwork with a financial institution can designate a specific beneficiary to assume ownership of an account after their passing. This process takes place outside of probate court and allows for the immediate transfer of assets that may otherwise end up in legal limbo for months.
Transferring resources to a trust
A trust is a legal entity created specifically to hold and control property. The trust someone starts and funds can oversee the management of their small business or the distribution of their property to their family members. The trustee has to comply with the instructions provided by the trustor. There are a host of different types of trusts that can work well in conjunction with other estate planning documents. People concerned about benefit eligibility, estate taxes or beneficiary issues may want to use a trust as a way of keeping certain resources out of probate court.
There are a host of other estate planning solutions available for those who want to keep certain assets, or as much of their property as possible, out of probate court. Setting clear estate planning goals, like minimizing probate involvement, can guide someone as they create or update an estate plan.