Probate is a legal process that happens after someone dies. It entails proving in court that the deceased person’s will is valid, making an inventory of the property and assets left by the person who died, and having this property appraised. According to the instructions spelt out in the will, once this is done, taxes are paid, debts are settled, and the remaining assets are distributed among the heirs. If there is no will, state law directs where the money is paid.
Why Should Probate Be Avoided?
It is widely believed that it is always a good idea to avoid probate. This belief may be because probate tends to tie property up for a long period, easily over a year. Also, it tends to be quite expensive since legal and court fees can eat up some 5% of the entire estate’s value.
Avoiding Probate When There Is A Small Estate
These days, it is common for all states to offer a shortcut through probate when the estate is small. You may also discover that your state even allows you a way around probate altogether when estates are small. Two of these shortcuts are:
Using Affidavits To Claim Property
If the total value of all the assets in the estate falls below a certain amount, those who stand to inherit anything except real estate may be able to skip probate altogether. The exact amount varies greatly and depends on state law. If the estate qualifies by falling below this threshold, anyone set to inherit can prepare a short document stating they are entitled to a certain item of property under a will or state law. This paper, called an affidavit, is signed under oath. The moment the individual or institution holding the property -which could be a bank where the deceased had an account – receives the affidavit and a copy of the death certificate, the money or other property is released.
Simplified Court Procedures
As defined by state law, a second option when it comes to small estates involves a faster, simpler version of probate. In these cases, even though the probate court still plays a role, it exerts far less control over the settling of the estate. Additionally, in many states, these more simplified procedures are straightforward enough that anyone can handle them without a lawyer. The result is that you end up saving money and time.Even if your heirs decide to go for any one of the two options described above, and providing your estate falls within the description of your state’s small estate, it is always necessary for you to leave a will.
How Can Larger Estates Avoid Probate?
If the amount of money and assets in your estate exceeds the definition of a small estate according to your state, there are certain actions you can take for your estate to avoid probate upon your death. Here are some ideas:
Create A Revocable Living Trust
By placing your valuable property in a revocable trust, the trustee owns the property. After you die, the trustee can quickly transfer the property in the trust to family members or other people to whom you have left it in the trust document.
Turn your bank and retirement accounts into payable-on-death accounts. This is done by filling out a beneficiary form. When you die, the money goes directly to the assigned beneficiary without going through probate. Security registrations, and, in some states, vehicle registrations can work the same way. Over half of the states also permit the transfer-on-death real estate deeds that take effect when you die. Meeting with an Estate Planning Attorney will allow you the opportunity to find out about other strategies to avoid probate. They will help protect your assets after you die.